Economics

Elasticity of demand refers to the degree of responsiveness in quantity demand to a shift in price with all other factors being kept constant. A relatively elastic demand indicates that a small change in price can cause a large change in quantity demanded whereas a relatively inelastic demand indicates that a large change in price would lead to a small change in quantity demanded.

Factors that affect the price elasticity of demand are fraction of income spent on the good, availability of substitutes, prior commitment of buyer, luxury, habit forming, etc. And sometimes, it is also possible that the market demand may be elastic while individual demand is inelastic or vice versa.

Similarly, in the case of drugs, a drug may generally have an elastic market demand, but for a particular individual it may be inelastic. This is because the some people may have may be heavily addicted to the drug while others may not be. Those who are extensive addicts would be willing to pay relatively higher prices for the drug, and change in price of the drug may have relatively less impact on the quantity demanded as they will want to continue a certain amount of drug consumption despite the drug prices. While on the other hand, people may in general be likely to switch to other drugs or adjust their consumptions according to price changes if they are not heavily addicted to it. If addicts form a small proportion of the total consumers and the larger proportion is made up of those people who would not be resistant to switching their drugs in search of lower prices, then the despite the individual addicts demand being price inelastic, the general market demand shall be price elastic.