Question

. [5 pts] A life-saving medicine without any close substitutes will tend to have a. a small elasticity of demand. b. a large elasticity of demand. c. a small elasticity of supply. d. a large elasticity of supply.

Answer 1

The correct answer is the option A: a small elasticity of demand.

Step-by-step explanation:

To begin with, the concept known as "price elasticity of demand" refers to the relationship that shows how much the quantity demanded of a product will change when the price of it changes. And therefore that it indicates the variation that exists between the price and the quantity demanded for the product.

Secondly, when it comes to products that are highly essential to life, like water, the price elasticity of its demand will be inelastic or what is the same as small elastic due to the fact that it does not matter how much the price changes, the amount demanded by the consumers will stay due to the fact that the product is highly needed in their lives.