Elasticity of Demand for Prescription Drugs Is Estimated to Be

question 3

Multiple Choice

Elasticity of demand for prescription drugs is estimated to be much lower than elasticity of demand for one particular brand of over-the-counter cough medicine.One reason for this is

• A)there are many substitutes for prescription drugs in the short run.
• B)there are many substitutes for prescription drugs in the long run.
• C)there are no substitutes for one brand of cough medicine in the short run.
• D)there are no substitutes for one brand of cough medicine in the long run.
• E)there are few substitutes for the broad category of prescription drugs while there are many substitutes for one brand of cough medicine.

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Definitions:

Incentives

Factors, either monetary or non-monetary, that motivate individuals or businesses to act in a certain way.

Scarce

A characteristic of resources that are limited in availability, which can lead to competition for their use.

Freely Available

Resources, information, or products that can be accessed or obtained without any payment or restrictions.

Economic Choice

Economic choice involves making decisions on the allocation of scarce resources among competing needs or desires to maximize benefits and utility.