Imagine an illness with two cures—drug X and drug Y. Drug X and drug Y are both made by the same firm.

Two events recently happened. First, a study was released showing that drug X is less effective than drug Y. Second, the ingredients used to produce drug X increased in price. What are the consequences of these events?


Choose one:

A. The demand for drug X shifts to the right, and the supply of drug X shifts to the left. The result is a rise in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

B. The demand for drug X shifts to the right, and the supply curve for drug X shifts to the left. The result is an unknown change in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

C. The demand for drug X shifts to the left, and the supply curve for drug X shifts to the left. The result is an unknown change in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

D. The demand for drug X shifts to the left, and the supply curve for drug X shifts to the left. The result is a rise in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.