Observations of real-world situations that appear to violate a consumer optimum could be offered as evidence favoring

Refer to the diagram for a monopolistically competitive firm. If more firms were to enter the industry and product differentiation were to weaken, then:

A.  resource misallocation would become more severe.
B.  the demand curve would become more elastic.
C.  equilibrium output would decline and equilibrium price would rise.
D.  equilibrium output would decline and equilibrium price would fall.

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the accompanying graph. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph. At a price of $15 (the price at which the two demand curves intersect), the price elasticity of demand for the new drug is ________ the price elasticity of demand for the over-the-counter pain reliever. 

A. greater than B. the same as C. the reciprocal of D. less than