ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Empirical estimates of price elasticities of demand (PED) for pharmaceuticals suggest that they are relatively price inelastic.

Detailed explanation-2: -a) If demand is price inelastic, then increasing price will decrease revenue.

Detailed explanation-3: -Perfectly inelastic products would be something like air or water, and no one can really restrict that at this point in time. The most common products that are inelastic would be food, prescription drugs, and tobacco products. Another product that could be considered close to perfectly inelastic would be gas.

Detailed explanation-4: -If the price increase had no impact whatsoever on the quantity demanded, the medication would be considered perfectly inelastic. Necessities and medical treatments tend to be relatively inelastic because they are needed for survival, whereas luxury goods, such as cruises and sports cars, tend to be relatively elastic.