A life-saving medicine without any close substitutes will tend to have

a. a relatively inelastic demand.

b. a relatively elastic demand.

c. a unit elastic demand.

d. a perfectly elastic demand.

The correct answer is -

• Option (A) a relatively inelastic demand

Explanation -

• In general, demand is inelastic for a necessity. On the other hand, demand is elastic for a luxury or for goods that have several substitutes. In the given example, the medicine is a life-saving drug without any close substitute. Therefore, even if the price rises, the quantity demanded is unlikely to change significantly. Its a necessity than a luxury. Further, it has no close substitute. Therefore, demand is relatively inelastic.