pass the gains along to consumers in the form of lower prices? The price elasticity of demand plays a key role

in answering these questions.

Imagine that as a consumer of legal pharmaceutical products, you read a newspaper story that a technological

breakthrough in the production of aspirin has occurred, so that every aspirin factory can now produce aspirin

more cheaply. What does this discovery mean to you? Figure 5.8 illustrates two possibilities. In Figure 5.8 (a),

the demand curve is highly inelastic. In this case, a technological breakthrough that shifts supply to the right,
from S0 to S1, so that the equilibrium shifts from E0 to E1, creates a substantially lower price for the product

Access for free at openstax.org
with relatively little impact on the quantity sold. In Figure 5.8 (b), the demand curve is highly elastic. In this

case, the technological breakthrough leads to a much greater quantity sold in the market at very close to the
{"uploaded_via": "batch_uploader", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "batch_upload": true, "file_type": ".pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "title": "Principles of Microeconomics 3e", "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99}