Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Priya's father has become a dipsomaniac i.e. a person who consumes alcohol excessively. What elasticity does liquor offer to Priya's father?

Options:

Elastic elasticity of demand

Unitary elasticity of demand

Inelastic elasticity of demand

Both 1 and 3

Correct Answer:

Inelastic elasticity of demand

Explanation:

Priya's father is a dipsomaniac and thus, for him the law of demand doesn't exists. The marginal utility derived from the consumption of extra glass of liquor will always give him extra satisfaction. Thus, we can say he has inelastic elasticity of demand. Inelastic demand of a commodity indicates that a change in price results in relatively less change in quantity demanded. As, irrespective of the price offered a dipsomaniac, due to his addiction, he will buy the commodity at any price.