Below are the supply and demand functions for two markets On

Below are the supply and demand functions for two markets. One of the markets is for BMW automobiles, and the other is for a cancer-fighting drug, without which lung cancer patients will die. Explain which diagram most likely represents which market and why.

Solution

1st diagram represents = the cancer fighting drug.

Because demand for the drug is constant irrespective of the price of the drug; i.e a patient having cancer will buy the drug, irrespective of the price, and this is obvious; as it is a life and death situation so three drug is necessary.

While figure 2 = BMW automobiles.

Because obviously if prices go down everyone will buy it and vice versa i.e the demand is elastic and it will change according to the pricE.