When it comes to understanding the relationship between price and demand, economists use the concept of price elasticity. Price elasticity measures the degree to which demand for a product changes as the price of that product changes.
In general, a product is considered to have price inelastic demand if changes in price have only a small effect on the quantity demanded. Conversely, a product is considered to have price elastic demand if changes in price have a significant effect on the quantity demanded.
So, which of the following is likely to have the most price inelastic demand? Let’s take a look at a few examples.
Firstly, healthcare services are often considered to have price inelastic demand. This is because the demand for healthcare services is not strongly influenced by changes in price. When it comes to medical care, patients are often willing to pay whatever it costs to maintain their health, regardless of the price. This makes healthcare services a good example of a product with price inelastic demand.
Another example of a product with price inelastic demand is gasoline. Although the price of gasoline can fluctuate greatly, people still need to fuel their cars and will continue to do so even if the price of gasoline rises. This means that while the price of gasoline may affect the quantity demanded to some extent, it is not enough to significantly impact overall demand.
Lastly, addictive substances such as cigarettes and alcohol are products with price inelastic demand. Even if taxes and prices on these products increase, consumers will still purchase them due to their addictive nature. This makes it difficult for prices to significantly affect the overall demand for these products.
In conclusion, there are many products in various industries that are considered to have price inelastic demand. Healthcare services, gasoline, and addictive substances are all examples of products that have limited sensitivity to changes in price. While these products may experience minor changes in demand due to price changes, overall demand for them will remain fairly consistent regardless of price fluctuations.
Read More: WHICH OF THE FOLLOWING ACTIONS CAN NOT BE DONE IN THE HOOTSUITE PLANNER FEATURE?
