A life-saving medicine without any close substitutes will tend to have
a. a small
b. a large elasticity of demand.
c. a small elasticity of supply.
d. a large elasticity of supply.
Answer to Problem 1CQQ
Option ‘a’ is the correct answer.
Explanation of Solution
Option (a):
Lower the availability of substitute, lesser will be the elastic demand. This is because if the price of the good were to increase, people are left with little or no choice but to pay the higher price for it. Since life saving medicine has no close substitute and it has smaller demand elasticity. Thus, option ‘a’ is correct.
Option (b):
More the availability of substitute, more elastic the demand will be. Since life saving medicine has no close substitute, it does not have larger demand elasticity. So option ‘b’ is incorrect.
Option (c):
More the availability of substitute, more elastic the demand will be, and it does not affect elasticity of the supply. So option ‘c’ is incorrect.
Option (d):
More the availability of substitute, more elastic the demand will be, and it does not affect elasticity of the supply. So option ‘d’ is incorrect.
Concept Introduction:
Elasticity of demand: It measures how much quantity demanded responds to the changes in the price or income.
Substitutes: Substitute goods: Substitute goods are those goods that can be used for the same purpose.
Want to see more full solutions like this?
Chapter 5 Solutions
Principles of Economics (MindTap Course List)
- 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.arrow_forwardThe price elasticity of demand measures how much the quantity demanded responds to changes in the price. In health care, demand is relatively inelastic because close substitutes exists. a. True b. Falsearrow_forward9 21 BBM_MI22 APF X Recordings - Onel x Calendar - Armstro X Mail - Armstrong, X Topic: Economic E X Recordings - Onel x Price Elasticity of C X + structure.com/courses/967/assignments/14531 4.2 Based on your answer in 4.1., illustrate and explain the elasticity of demand in the market for high blood pressure medication. Clearly indicate the correct percentage changes in price and quantity on the elasticity graph. (3) 4.3 Explain how Beta-Blockers can increase total revenue (TR). Question 5: [5] Read the following scenario and answer the succeeding questions. Scenario 4: Suppose the average income of a consumer named Warren decrease from R18000 to R12000. As a result, the quantity of product A demanded by Warren increase from 200 units to 280 units. For scenario 4, answer the following questions: 5.1 Use the ARC (midpoint) formula to calculate the income elasticity of demand for product A given the information above. (3) 5.2 Based on your answer in 5.1, is product A an inferior good or…arrow_forward
- Elasticity of demand is 2.6. We would say those customers are? price sensitive, not price sensitive, or marginalarrow_forwardA l ife-saving medicine without any close substitutesw•lltend to have• a small elasticity of demand.b. a la'lle elastici ty of demand.o a small elasticity of supolv.d. a faille elastici ty of supply.arrow_forwardf the quantity of concert tickets sold decreases by 10 percent when the price increases by 5percent, this market is operating in which section of its downward-sloping straight-linedemand curve? Group of answer choices This market shows elastic demand which could occur at any point along the demand curve. the section below the point of unit elasticity the point equal to unit elasticity the section above the point of unit elasticityarrow_forward
- if the change in the price is 10percent and the value of elasticity is 0.5 then calculate how much quantity demanded will be decreased?arrow_forwardE2 What sign will the cross elasticity for a complement have? a. Positive b. Negative C. Zero d. Sign does matter The "cross elasticity of demand" for substitute will be a. positive b. negative C. very small in absolute vale d. normal e. superiorarrow_forwardThe longer the time period under study, a. the more inelastic is the price elasticity of demand. b. the more likely any given price cut will result in a smaller reaction by the consumer. c. the less sensitive consumers will be to price changes. d. the more elastic is the price elasticity of demand.arrow_forward
- Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage LearningEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co