Question

Give an example of a medical good or service that would likely have:

1. Elastic Demand

2. Inelastic Demand

Write a detailed answer

Answer 1

Elastic demand : body protein for gymnasium.

Suppose price of brand A of protein goes up, people will shift to brand B immediately. Protein has many substitutes in form of different brands. So the demand for this is elastic. People will move on to cheaper good if price of other goes up. For a elastic demand % change in price is less than % change in quantity demanded.

Inelastic demand : medicine for rare diseases

Suppose that there is a very rare medicine for some type of cancer. The medicine has no substitute. It is the sole cure for this particular disease. Here the demand is inelastic. People have to buy this medicine only even if the prices go up. They have no alternative. The % change in price is greater than the % change in demand here.

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