question archive In the illegal drug market, dealers can sometimes dramatically decrease the purity of the product without seeing much of a decrease in sales
In the illegal drug market, dealers can sometimes dramatically decrease the purity of the product without seeing much of a decrease in sales
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In the illegal drug market, dealers can sometimes dramatically decrease the purity of the product without seeing much of a decrease in sales. On the other hand, in restaurants, a small decrease in food quality can often mean death to the business. Explain why this is true in the context of elasticity
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It is true
Drugs are a necessity for addicts and it has hardly any substitutes. So demand for drugs is inelastic. Hence even if quality decreases, drug addicts have to purchase drugs. Otherwise they may have to face problems associated with leaving drugs
In case of restaurant food demand is quite elastic. This us because there are too many substitutes available in the market and also it is a sort of luxury. So as quality decreases, people reduce demand sharply and start consuming alternative substitutes.
