Question

Which products, if any, will have relatively inelastic demands? Do any products have a perfectly inelastic...

Which products, if any, will have relatively inelastic demands? Do any products have a perfectly inelastic demand?

Pick one of the products on your list. How, if at all, could consumers adjust to a rise in the product's price? Decide whether you think the product has perfectly inelastic demand. To say it another way, decide whether you think the demand curve will be vertical, or just quite steep? Explain.

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Answer #1

Ans. Necessary goods have an inelastic demand. For example - salt, sugar, gasoline etc.

But prescription drugs (no generic substitute available) will have perfectly inelastic demand.

Consider prescription drug (no generic substitute available), if price of the drug under consideration will increase then its demand won't change because it has no substitute to which the consumer (or patient) can shift on. So, it will have a perfectly inelastic demand i.e. price elasticity of demand will be zero. This means that the demand curve will be vertical and not just steep.

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