Question

Medical authorities announce that an acne medicine (Retin-B) has previously unknown, and desirable, wrinkle-reducing properties. We would predict that, after this announcement, the price of Retin-B will ________ and the quantity of Retin-B sold will ________.
A. increase; decrease
B. increase; increase
C. decrease; decrease
D. decrease; increase

Answer 1

Answer:

B. increase; increase

Explanation:

The announcement would lead to an increase in demand for Retin-B. The demand curve would shift to the right. An increase In demand while supply remains unchanged would lead to an increase in both equilibrium price and quantity.

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