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Describe the various factors affecting demand and also draw the demand curve if it is perfectly...

Describe the various factors affecting demand and also draw the demand curve if it is perfectly inelastic and the demand for cardiac bypass surgery, given that the government pays the full cost for any patient.

Please don't copy the answer from the web, this needs to pass the plagiarism check

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Answer #1

Factors affecting demand curve:

  • Income of consumers
  • Availbility of substitutes and complement goods
  • General trend of market
  • Expectation of future
  • Nature of demand (Necessary / Luxury good)

Elasticity is calculated as %change in quantity demnded / %change in price

Elasticity of demand for necessary goods is less than 1. Perfectly inelastic demand occurs when consumer is willing to pay any price for the good they wants to consume. Bypss surgery will have inelastic demand curve because even if government do not pay for the cost, individuals are willing to pay the cost of it.

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