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Question
Give reason or explain the following statement:
Demand for necessaries is inelastic.
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Solution
Necessary goods are those goods which a consumer demands for sustaining his life. A consumer cannot reduce the consumption of these goods. For example, food is a necessity good. The demand for such goods does not change much in response to the changes in their prices. Even when the price rises the consumer cannot reduce their demand. Hence, such goods have an inelastic demand.
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