2002 · Q113
Consider the following statements:
- 1The demand for commodities having a large number of close substitutes is less elastic than the commodities having a smaller number of substitutes.
- 2Luxury items have a highly elastic demand.
- 3The commodities whose consumption cannot easily be postponed have less elastic demand.
Which of these statements is/are correct?
Indian EconomyConcept and framework
- A1 only
- B2 and 3
- C1 and 2
- D1, 2 and 3
Explanation
A commodity with many close substitutes has more elastic (not less elastic) demand — statement 1 is backwards and wrong. Luxury items do have highly elastic demand — statement 2 is correct. Goods whose consumption cannot easily be postponed (necessities) have less elastic demand — statement 3 is correct. Hence 2 and 3 are correct — (B).