Answered: In the presence of insurance coverage,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In the presence of insurance coverage, over the counter purchases of drugs like acetaminophen, ibuprofen and naproxen sodium will have a higher elasticity of demand than physician prescribed drugs.

True

False

Expert Solution

Step 1: Define demand

Demand:

Demand is the desire of an individual ability and willingness to pay for a product. Demand is showing a negative connection between price and the demanded quantity by the consumers. The income of the consumers, resource availability affect the demand curve.

Change in price and quantity leads to changes in the shape of the demand curve. Price and demand have an inverse relationship. When price increases demand decreases and vice-versa.

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