Demand is price inelastic for
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Life saving medicines
Demand is price inelastic when the quantity demanded changes by a smaller percentage than the price. A patient needs a life-saving medicine whatever its price. So its demand changes very little when the price goes up.
The price elasticity of demand depends on two things:
The nature of the good. Demand for a necessity is likely to be inelastic. Demand for a luxury is likely to be elastic.
Close substitutes. If close substitutes are hard to find, demand is likely to be inelastic. A life-saving medicine usually has no close substitute.
Airplane tickets, air conditioners and gold jewellery are comforts or luxuries. People can put off buying them when prices rise, so their demand is elastic.
NCERT (2026-27): “2.6.2 Factors Determining Price Elasticity of Demand for a Good The price elasticity of demand for a good depends on the nature of the good and the availability of close substitutes of the good. Consider, for example, necessities like food. Such goods are essential for life and the demands for such goods do not change much in response to changes in their prices. Demand for food does not change much even if food prices go up. On the other hand, demand for luxuries can be very responsive to price changes. In general, demand for a necessity is likely to be price inelastic while demand for a luxury good is likely to be price elastic.…” |