Despite the rising costs of medical care in the United States, customers continue to increase their purchases of medical goods and services, particularly in elective procedures. It seems that no matter how much prices increase, customer demand for medical services stays the same or increases. This situations describes an example of:
A) inelastic demand.
B) direct demand.
C) irrational demand.
D) elastic demand.
E) unitary demand.

Question

Quizplus · Accepted Answer

Inelastic demand refers to a situation where a change in price has little effect on the quantity demanded by customers. In this scenario, despite the rising costs of medical care, customers continue to increase their purchases of medical goods and services, particularly in elective procedures. This implies that demand for medical services is relatively insensitive to price changes and hence, is an example of inelastic demand.

Despite the Rising Costs of Medical Care in the United