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QUESTION

Suppose that pharmaceutical drugs have an inelastic demand, and computers have an elastic demand.

Suppose that pharmaceutical drugs have an inelastic demand, and computers have an elastic demand. Due to a technological advance in both markets, the supply curve of both markets doubles the supply of products.

a. What happens to the equilibrium price and quantity in each market?

b. Which product experiences a larger change in price?

c. Which product experiences a larger change in quantity?

d. What happens to total consumer spending (total revenue) for each product?

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