Define own-price elasticity of demand and explain how it is related to the demand curve. Provide four reasons why the demand for medical services is likely to be inelastic with respect to its price.

• The own-price elasticity would allow the analyst to predict how the demand for a product changes when the price fluctuates. It is estimated by the change in demand divided by the change in price. Hence, with a given price elasticity, the management team could anticipate how demand for a particular produce fluctuates when they set a new price policy. That prepares an appropriate plan for production and inventory management.

By the definition of the own-price elasticity, it is the slope of the demand curve.

Medical services and price elasticity:

The demand for medical services would be inelastic with its price due to some following reasons:

• Medical services are not daily services, that would be consumed on regular basis. It means the demand for medical services would rise when people have health problem. Or, a reduction in price of medical service would not generate more incentives to people to visit hospital.
• Medical services are necessary for survival, which are not replaceable by other services. With that being said, regardless of an increase in price, the demand for that necessary services will stay unchanged.
• Since medical services are related to people's health, consumer behavior would weight heavily on the quality of the service, but not price as actual goods.
• The existence of insurance would relieve the pressure on price of medical expenses, in which medical services are more affordable. With that being said, higher price of medical services would not reduce the demand for medication.