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Why is demand for water referred as inelastic?
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Why is demand for water referred as inelastic?
Demand for Water: Inelasticity


Water is one of the basic necessities of life, and its demand is considered inelastic because of the following reasons:


1. No Substitute


  • Water has no substitute, which means that there is no other product that can be used in place of water.

  • Due to its unique properties, water is essential for human survival, making its demand inelastic.



2. Low Price Elasticity


  • Water is a relatively cheap commodity, and its price doesn't have a significant impact on its demand.

  • Even if the price of water increases, people still have to consume it because it is a basic necessity.



3. Essential for Production


  • Water is not only essential for human survival but also for production processes in various industries.

  • Industries like agriculture, manufacturing, and energy require a significant amount of water for their production processes, making the demand for water inelastic.



4. Geographical Constraints


  • Many regions around the world face water scarcity due to geographical constraints like arid and semi-arid areas.

  • In such areas, the demand for water is inelastic because people have no other option but to consume it, regardless of its price.



Due to the above reasons, the demand for water is inelastic, which means that any change in its price has a minimal impact on its demand. Therefore, governments and policymakers must ensure that everyone has access to clean and affordable water to meet their basic needs.
Community Answer
Why is demand for water referred as inelastic?
Demand for water is inelastic, because even at a high price, you would continue to buy some small amount of water.
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Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decreas e) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.At the price level mentioned in the case, Aggregate Supply is ____________.

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Why is demand for water referred as inelastic?
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