If markets for addictive drugs have a more elastic demand curve than one would expect (such that an increase in their price does reduce demand significantly), and if addicts tend to be unstable people with low incomes, we might speculate that the most likely reason for the surprising elasticity estimates is that A The substitution effect is smaller than expected because addicts aren't as addicted as we thought B The income effect has a more constraining effect than we had anticipated C Addictive drugs are inferior goods D The income and substitution effects work in opposite directions

If markets for addictive drugs have a more elastic demand curve than one would expect (such that an increase in their price does reduce demand significantly), and if addicts tend to be unstable people with low incomes, we might speculate that the most likely reason for the surprising elasticity estimates is that A The substitution effect is smaller than expected because addicts aren't as addicted as we thought B The income effect has a more constraining effect than we had anticipated C Addictive drugs are inferior goods D The income and substitution effects work in opposite directions

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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