A person who takes a prescription drug to control high cholesterol most likely h

Question

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is Select one: a. highly responsive to changes in income. b. unit elastic. c. elastic. d. inelastic.

A production possibilities frontier is a straight line when Select one: a. the rate of tradeoff between the two goods being produced is constant. b. an economy is interdependent and engaged in trade instead of self-sufficient. c. the rate of tradeoff between the two goods being produced depends on how much of each good is being produced. d. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good.

Explanation / Answer

A person who takes a prescription drug to control high cholestrol most likely has a demand for that drug that is inelastic.

The slope of the production possibilities frontier measures the rate of tradeoff between the two goods being produced in an economy. A straight line implies that the slope is constant. In other words, the rate of tradeoff between the two goods being produced is constant.

A production possibilities frontier is a straight line when

a) the rate of tradeoff between the two goods being produced is constant.

When a 1% change in price produces a less than 1% change in quantity demanded, the good has price inelastic demand. An increase in price of the cholestrol drug will not impact the quantity demanded for that drug. Moreover, the increase in price will have a less than proportionate change in quantity demanded for that drug.

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