Running head: INELASTIC DEMAND AND PHARMACEUTICALS 1

Inelastic Demand and Pharmaceuticals

Name

Institution
INELASTIC DEMAND AND PHARMACEUTICALS

Inelastic Demand and Pharmaceuticals

Regardless of the price charged on the product, the quantity demanded remains

unchanged because the price is inelastic. Considering the decision to lower the price to $45 will

result in many sales but no profits for the company. One of the principles of economics state that

people respond to incentives which in most cases is in reduction of costs among other benefits

(Chindarkar & Thampapillai, 2018). Making a decision on the grounds that it is unethical to earn

profit from a devise that will save lives is something that will be disputed by shareholders who

want high profits. Being a monopoly company, it does not make economic sense to lower the

price and cut the profits. However, it can have other future benefits to the company. The overall

benefit that this decision has on the company is marketing as it will make it popular considering

that it is a monopoly selling at affordable rates. The company will benefit from other products

and not necessarily the one that saves lives.

INELASTIC DEMAND AND PHARMACEUTICALS

References

Chindarkar, N., & Thampapillai, D. J. (2018). Rethinking Teaching of Basic Principles of

Economics from a Sustainability Perspective. Sustainability, 10(5), 1486.