Question

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, all other things equal, you would expect the demand for:

A) medical examinations to be more price-elastic than is the demand for Bayer aspirin.
B) Bayer aspirin to be more price-elastic than is the demand for medical examinations.
C) Bayer aspirin to be more perfectly price-inelastic.
D) the two to be equally price-elastic.

Answer 1

Answer:

The correct answer is B) Bayer aspirin to be more price-elastic than is the demand for medical examinations.

Explanation:

As there are close substitutes for aspirin, a price.change in the commodity will steeply change the demand as the consumers will compare the product with its substitute prices. However, in the case of medical examinations, as there is not much substitutes available, the consumers will have to purchase them regardless of any price changes. Making them inelastic.