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Give Reason Or Explain the Following Statement: Demand for Habitual Goods is Inelastic. - Economics

Sum

Give reason or explain the following statement:

Demand for habitual goods is inelastic.

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Solution

The goods that a consumer is habituated to, such as liquor, cigarettes, etc., have inelastic demand. As the consumer is habituated of these goods, a change in the price of these goods has lesser impact on their demand. For example, if a person is habituated of cigarettes a rise in price of it will not have much impact on the demand as it is difficult for the consumer to do away with cigarette. Thus, the demand for such goods is inelastic.

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APPEARS IN

Micheal Vaz Economics HSC 12th Standard Maharashtra State Board
Chapter 4 Elasticity of Demand
Exercise | Q 2.2 | Page 313
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