Final answer:
The statement that demand for aspirin is more elastic over one month than over one year is false. Demand elasticity tends to increase over longer periods as consumers adjust their behavior and explore options.
Step-by-step explanation:
The assertion that the demand for aspirin over one month should be more elastic than the demand for aspirin over one year is False. Demand elasticity is influenced by the availability of substitutes, the necessity of the product, and the time period considered. Over short periods, consumers have fewer alternatives and are less responsive to price changes, making demand more inelastic. Conversely, over longer periods, consumers can adjust their behavior, explore alternatives, and become more sensitive to price changes, which makes demand more elastic.
In the scenario of a technological breakthrough in the production of aspirin, a more inelastic demand curve means that the price decrease is substantial but the change in quantity sold is minimal. With a highly elastic demand, the technological advancement leads to a greater quantity sold at prices close to the original. The nuances of elasticity underscore that aspirin producers may face challenges in pricing and revenue, especially if competitors also adopt the cost-saving technology to stay competitive.