a For the following pairs of services, which of the two services would you expect to be more income elastic? More price elastic? Why? (Your answer should demonstrate your understanding of the concept of elasticity.)

i. Surgical services versus allergist services

ii. Heart surgery versus cosmetic surgery

b. Would the opportunity cost of waiting time be higher for higher-income people or lower-income people? Given your answer, for which income group would money price tend to be a smaller portion of the full price?

a.

i. Surgical services can be considered to be less income and price elastic when compared to allergist services. Surgery can be understood as a more important an urgent need whereas an allergist service is a demand for urgency instead people are likely to use allergist services under luxurious consumption. Therefore, the elasticity of surgical services is lesser as even though the services may get costlier or income might decrease, the requirement of surgery cannot be postponed or ignored as it has a direct effect on the health of a person.

ii. Heart is a vital organ of the human body and so a heart surgery cannot be ignored. However, cosmetic surgeries are not a matter of life and death and can be postponed and ignored if the prices for the same increase or the income of the person decreases. Therefore, the requirement of a heart surgery service is less price and income elastic when compared with cosmetic surgery.

b. Yes, the opportunity cost of wasting time is more when high-income groups are concerned because these people can create more and more money in a given time, there businesses or jobs keep them busy so that they can earn money. Anytime that is spent not doing anything cannot be converted into money. whereas the poorer section of the society does not have a higher opportunity cost when compared to the richer section.