Ever wonder why pharmaceuticals are so expensive? In this video, we show how low elasticity of demand results in monopoly markups. This is especially the case with goods that involve the “you can’t take it with you” effect (for example, people with serious medical conditions are relatively insensitive to the price of life-saving drugs) and the “other people’s money” effect (if third parties pay for the medicine, people are less sensitive to price). Microeconomics Course: http://bit.ly/20VablY Next video: http://bit.ly/1TGcH08 Help us caption & translate this video! http://amara.org/v/GSLK/