Answer to Question #287387 in Microeconomics for Helmet

Question

During the covid 19 pandemic, the ayurvedic medicines have an inelastic demand and electronic devices have an elastic demand. Imagine that technological development doubles the supply of both the products(i.e quantity supplied at each price is twice as it was earlier). (i) what will be the equilibrium price and quantity in each market? (Ii) Which product experiences a larger change in price and which product experiences a larger change in quantity?

Answer 1

(i)The equilibrium price of ayurvedic drugs will not change, only the quantity offered will change and the demand will remain the same. The number of electronic medicines offered will increase and the equilibrium price will decrease accordingly and demand will increase in the future.

(ii) The price of Ayurvedic medicines can change constantly (+, -) and there will always be demand. But the number of electronic devices will always change, as it depends on market prices and production volume.