Economics

[kennynah]

Everyday economics :
Ordinary folks must conciously seek out good deals n not succumb to raised prices. This way, we don't encourage inflation by the vendors. For example, I choose to buy a kopi-o from this ah Soh that sells it for 60cents than from her neighbouring shop that sells the very same for 70cents. Now if everyone patronizes this 60cts shop, we will force that 70cts vendor to consider lowering the price. Laizze Faire (likely wrong spelling, told u my econs eff type)

[millionairemind]

I Do, I Do, I Do, I Do
The economic case for polygamy.
By Tim Harford
Posted Saturday, Feb. 18, 2006, at 2:27 AM ET

After more than a decade of war between separatist rebels and the Russian army, there are not many marriageable men to go around in Chechnya. So, acting Prime Minister Ramzan Kadyrov, probably not a feminist, proposed a radical step: "Each man who can provide for four wives should do it."

Polygyny (having more than one wife, as opposed to polygamy, which is having more than one spouse) is admissible under Islamic law but not Russian law, so Kadyrov is unlikely to make much progress with his proposal. But what difference would such a law make? It's natural to assume that polygyny is bad for women, partly because most of us would rather have our spouse to ourselves, and partly because we look at a place like Saudi Arabia, where polygyny is not uncommon, and note that women aren't even allowed to drive.

In 2001, Steve Chapman proposed the decriminalization of polygamy in America. In 1996, Robert Wright examined the styles of polygamy practiced by Bill Clinton and Bob Dole. In 2004, Masha Gessen outlined what drives the violent conflict in Chechnya.I'm not quite so convinced. A lot of the knee-jerk reactions against polygyny are from people who can't add up. In a society with equal numbers of men and women, each man with four wives gives women the additional pick of three men—the poor saps whose potential wives decided they'd prefer one-quarter of a billionaire instead. In the Sahel region of Africa, half of all women live in polygynous households. The other half have a good choice of men and a lot more bargaining power.

It's hardly surprising that in most polygynous societies, the bride's family gets large payments in exchange for her hand in marriage. If polygyny combined with women's rights, I bet we'd see more promises to wash the dishes. Not everybody would have to share a husband, but I can think of some who might prefer half of Orlando Bloom to all of Tim Harford—including my wife.

In a society such as Chechnya, where there is a shortage of young men, we would expect the reverse effect: Men get to pick and choose, playing the field, perhaps not bothering to get married at all. We don't have good data on Chechnya, but we have excellent information about an unexpected parallel.

A little over one in 100 American men are in prison—but there are several states where one in five young black men are behind bars. Since most women marry men of a similar age, and of the same race and in the same state, there are some groups of women who face a dramatic shortfall of marriage partners.

Economist Kerwin Charles has recently studied the plight of these women. Their problem is not merely that some who would want to marry won't be able to. It's that the available men—those not in prison—suddenly have more bargaining power. Goodbye to doing the dishes and paying the rent; hello to mistresses and wham, bam, thank you ma'am. The women whose potential partners have had their ranks thinned by prison are less likely to marry, and when they do marry, are likely to marry a man less educated than they are. Meanwhile, the remaining men, finding a surfeit of marriage partners, suddenly seem in no hurry to marry. And why would they?

The women's response makes sense: girl power. The women affected do everything to make the most of single life, including staying at school for longer and hunting for more paid work. The American prison system hasn't left them much choice.

When men are taken out of the marriage market by war or by prison, women suffer. The reverse is probably true, too: When women are taken from the marriage market, men suffer. In China, the policy of one-child families coupled with selective abortion of girls has produced "surplus" males. Such men are called "bare branches," and China could have 30 million of them by 2020. Perhaps polyandry—women with multiple husbands—would be the logical response to the situation in China. What will happen instead is that these lonely, wifeless men will end up sleeping with a relatively small number of women—prostitutes—with severe risks of sexually transmitted disease all around.

All this suggests that Kadyrov has a point about Chechnya. And perhaps the new HBO series Big Love will help to rehabilitate polygamy's reputation in the United States. Nevertheless, I am resolutely against the practice of allowing several women to marry one man. We men are downtrodden enough already.

[sidney]

I flipped economist pocket readers and sees some facts on xin jia po: all nos rounded up or near accurate

Avg gdp per pax is 30k. Meaning when i turn my head, i'm poorer than the folks on my left, right front and back.
Pop Men : women -----> 1.1 : 1.0 The residual 0.1 can be found in geylang, dust-ka.
Men die younger @ 79 Women die later 82.

Now i know how come chasing women is sometimes a economic issue rather than love, because supply cannot match demand. lol

[kennynah]

it is a challenge understanding your post

[sidney]

lol, just facts and figures by the economist. I reinterpret it. By the way the avg capita per pax of 30k is gd, so sometimes really thx god i'm born in singapore which is sheltered from natural diasters and such.

[millionairemind]

Wealthier Than Thou
Is it enough to be rich, or must others be poor?
By Steven E. Landsburg
Posted Friday, Oct. 10, 1997, at 3:30 AM ET
What do people really care about: being rich, or being richer than their neighbors?

Of course, people care about a lot of things that have nothing to do with being rich. Just by logging on to Slate instead of using this time to earn an extra dollar, you've refuted the proposition that people pursue wealth the way sharks pursue food. Instead, we compromise between the pursuit of wealth and the pursuit of leisure, sometimes accepting less of one so we can have more of the other.

Besides wealth and leisure, there's a long list of other things we value. We like to avoid risk; we care about the qualities of our mates; we want our children to be happy. But wealth is one of the things we strive for, so it makes sense to ask how we measure success in that dimension.

One hypothesis is that it's only your raw wealth that matters--a million dollars will make you happy regardless of whether it's half or twice what your neighbor has. In other words, you measure the value of your wealth by what you can buy with it. The alternative hypothesis is that you also care about your place in the pecking order.

If only raw wealth matters, your hard-working neighbor is no threat to you. He keeps what he earns, you keep what you earn, and you can each decide whether you'd rather earn more money or enjoy more leisure. On the other hand, if people care about the pecking order, you and your neighbor can get involved in a costly and futile "arms race," sacrificing valuable leisure in your mutually frustrating efforts to be the top earner on the block.

To put this in perspective, imagine that we could all agree to take an hour off from work this week. Under the "raw wealth" hypothesis, there's no advantage to that agreement. After all, you were always free to take an hour off. But under the "pecking order" hypothesis, the agreement could serve as a sort of "arms control" that leaves everyone better off by preserving our relative positions while freeing up some extra time for leisure. But any such agreement would be impossible to enforce, which (if the "pecking order" hypothesis is true) is a failure of the marketplace.

Which hypothesis is true? Economists traditionally have assumed that relative position does not matter, and noneconomists traditionally have scoffed at that assumption. The scoffers point to medieval monarchs who earned less (in real terms) than today's average American; nevertheless, by the standards of their contemporaries, they lived--literally--like kings. It's easy to imagine that ruling all of 15th-century England brought greater satisfaction than does, say, the life of a modern certified public accountant.

But when something is easy to imagine, it's often because your imagination is limited. In this case, your vision probably has neglected to include the disease, monotony, and isolation of medieval life. I think it not at all unlikely that Henry V would have traded his kingdom for modern plumbing, antibiotics, and access to the Internet.

Here's another reason to be skeptical of the hypothesis that people care deeply about how their income compares with others': I've never met anyone who subscribes to the analogous theories about leisure or risk. Do you care about the length of your vacation, or about whether your vacation is longer than your neighbor's? Do you care about how well your air bag works, or about whether you've got the best air bag in your neighborhood? In each case, surely it's the former. But if we feel that way about leisure and risk, why would we not feel that way about income?

On the other hand, if you really believe that people care about wealth only for what it will buy them, it's hard to explain why Bill Gates gets up and goes to work in the morning. Surely it's not because he's afraid he'll run out of money? But it just might be because he's afraid he'll lose his No. 1 ranking in the Forbes 400. (Though here I'm tempted to respond that it's a mistake to generalize about human behavior on the basis of a few extraordinary individuals who probably--and quite atypically--love their work.)

Recently, three economists named Harold Cole, George Mailath, and Andrew Postlewaite (for whom I will use the collective abbreviation CMP) have proposed a compromise between the two theories: On the one hand, people do not care directly about their relative positions in the wealth distribution. On the other hand, they care indirectly about their relative positions, because a high relative position allows you to attract a better mate.

The CMP theory sounds very simple, but it has some remarkable implications. First, it implies that the competition for mates drives most people to save too much money. Young people oversave in an attempt to improve their own prospects, and old people oversave in an attempt to improve their children's prospects. If everyone could agree to save a little less, we'd all be better off: Our relative mating-game scores would be unchanged, but we'd all have more money to spend. And yet, while this "oversaving" is costly to any given generation, it enriches future generations.

When people compete by saving, the rich have a head start. So the CMP theory suggests that income inequality should grow over time. But if inequality becomes so great that people lose all hope of changing their relative positions, then the incentive to oversave disappears, and the inequality could begin to shrink.

The most striking implication of the CMP theory is that the concern for relative position vanishes in societies where mates are allocated by mechanisms other than wealth. Imagine an aristocracy, where your social status is inherited from your parents and dictates your choice of mate. Such an aristocracy might not be sustainable. People with low status and high wealth can prove attractive to people with high status and low wealth, whereupon the entire social structure disintegrates. Even families with low status and low wealth might be able to save aggressively for several generations in order to buy their way into the aristocracy, and again there is an eventual breakdown.

But the CMP researchers have identified a way for an aristocracy to be sustained indefinitely. Mixed (high status-low status) marriages can be effectively deterred in a society where the children of such marriages are relegated to the lowest status of all. In that case, a low-status man who wants to crack the social barriers (and who cares about his offspring) must save enough to purchase high-status mates for both himself and his children. CMP have demonstrated that to succeed, such social rebels would have to achieve impossibly high savings rates--so the aristocracy endures.

Now here is the punch line: Imagine two societies that are identical in all the ways that economists traditionally view as important. They have identical populations. They have access to identical technologies. Their people have exactly the same preferences in all things. But in Society A, you attract your mate by wealth, and in Society B, you attract your mate by inherited status. Then the standards of living in these societies will differ dramatically and diverge dramatically over time, because they offer different incentives to save--and saving is one of the twin engines of economic growth. (The other engine is technological progress, which we've assumed is the same in both societies.)

The moral of the story is that cultural norms are extremely important. Of course, one could argue that everyone except economists knew this all along. But the CMP research demonstrates something genuinely new: that cultural norms can be extremely important even if we accept all the standard simplifying assumptions that economists like to make about human behavior.

We can go further, imagining societies where status is conferred not by accidents of birth but by learning, or by physical strength, or by darkness of complexion. Clearly any one of these societies will evolve very differently from all the others. But what makes them differ in the first place? Part of the answer, according to the logic of CMP, is that once a cultural norm is established--even for purely random reasons--it can become self-sustaining. Ideally, though, we'd like a coherent account of those "purely random reasons"--and I'm not sure anyone knows how to think about that.

[millionairemind]

Taken to the Cleaners?
Nobody can explain why laundries charge less for men's shirts than for women's.
By Steven E. Landsburg
Posted Friday, July 3, 1998, at 3:30 AM ET

My dry cleaner charges $1.65 to clean and press a man's shirt and $5.25 for a woman's blouse. What's going on here?

The laws of arithmetic allow only two possibilities. Women's clothing must be associated either with higher costs or with higher profit margins for the dry cleaner. Unfortunately, neither theory seems terribly plausible.

Let's start with the "higher cost" theory. In its most naive form, this theory predicts that if I move the buttons on my dress shirts from the right side to the left, the cost of laundering them will more than triple. That one's not going to fly. So, to give the theory a fair chance, we have to look for more significant differences between men's and women's clothing.

Well, like what? You could argue that women's clothing is typically made of more delicate fabrics than men's. But if that's the relevant factor, why don't dry cleaners just quote different prices for different fabrics? (For some materials, such as silk, they typically do quote separate prices. The question is why this practice does not completely displace that of distinguishing between men's clothes and women's.)

An alternative version of the theory is that women's clothes are costlier to process because women demand higher quality work. I can't disprove that version, but I have no real evidence to support it, either. So, in a search for better alternatives, I called three different dry cleaners and asked for their explanations. The first said that men's shirts are machine pressed, while women's are hand pressed. That left me wondering why they don't simply quote different prices for different kinds of pressing. The second said that women's shirts require specialized treatment because they are typically doused with perfume. That left me wondering why men who use after-shave are not chronically dissatisfied with their dry cleaners. The third said that this was their pricing policy, and if I didn't like it, I was free to shop elsewhere.

In the absence of a clear, convincing story about gender-specific costs, let's see what kind of story we can tell about gender-specific profit margins. In other words, let's ask whether my dry cleaner is exploiting female customers through higher markups.

To make sense of that theory, you have to ask why dry cleaners would want to discriminate specifically against women, as opposed to, say, men. That strategy makes sense only if men are more price-sensitive than women and hence more likely to walk away in the face of a high markup. But why should men be more price-sensitive? You could argue that men are less diligent about cleanliness and so more likely to respond to high prices by wearing unlaundered shirts. But as long as we're dealing in stereotypes, you could argue equally well that women are more willing to do their own laundry--in which case women would be more likely to walk away from a high price, and it would make more sense to discriminate against men.

So it isn't clear which gender is the more natural candidate for getting soaked at the cleaners. But there's a more fundamental reason to doubt that either gender can be victimized by price discrimination, and here it is: There are over half a dozen dry cleaners within easy walking distance of my house. If they're all earning higher profits on women's blouses than on men's shirts, why hasn't any of them decided to specialize in women's blouses?

Let me make that more concrete. Suppose the going prices are $1.65 for a man's shirt and $5.25 for a woman's blouse, even though (under the theory we're currently entertaining) they are equally expensive for the cleaner to handle. Then if I were a dry cleaner, I would announce a uniform price of $5 for all shirts and blouses--thereby attracting all the women's business and none of the men's. Because nobody has adopted that obvious strategy, we should suspect that despite appearances, the profit margin on women's clothing can't be much higher than on men's.

In fact, the process wouldn't stop there. As soon as I announced a uniform price of $5, my neighbor would announce a price of $4.75. Ongoing competition for the (temporarily) more lucrative women's business would quickly eliminate any profit differential.

That argument rests on the fact that dry cleaners are highly competitive. If Microsoft ran the entire dry cleaning industry, it might very well choose to discriminate against women (or men, depending on market conditions). But in the world we live in--or at least in the neighborhood I live in--there are so many interchangeable dry cleaners that none of them should be able to get away with exploiting anyone.

One of my colleagues' wives insists I've got this wrong--she says she's so loyal to her own dry cleaner that no discounter can lure away her business. If most customers are as devoted as she is, then each dry cleaner is like a mini-Microsoft, with its own captive customer base. In that case, price discrimination can survive. But I am instinctively skeptical that many customers are as fanatically loyal as my colleague's wife.

The theory that only a monopolist can price discriminate is standard textbook fare, and it's borne out by a lot of observations. Movie theaters have a certain amount of monopoly power (on a given night, a given moviegoer is likely to have a strong preference for a particular movie at a particular theater), and they price discriminate by offering discounts to senior citizens (which is equivalent to discriminating against everybody under the age of 65). Airlines have even more monopoly power--once you know where and when you want to fly, you are likely to have an extremely limited choice of airlines--and they heavily discriminate against business travelers by charging more for midweek flights than for weekend flights (when most travel is for leisure).

By contrast, in the most competitive industries, there is no price discrimination. As I am fond of pointing out to my students, you've never heard of a wheat farmer who offers senior citizen discounts. Likewise for gas stations, which are ubiquitous and sell to everyone at a single price.

Well, at least that's what I used to tell my students. But I might have to make a small change in my lesson plan. The gas station nearest our campus has just announced a policy of senior citizen discounts on Wednesday afternoons. Is this price discrimination in favor of seniors, or does it reflect a genuinely lower cost of serving them?

If you push me hard enough, I can probably concoct some kind of story about lower costs. Maybe seniors tend to drive cars with bigger gas tanks, so they buy 20 gallons at a time instead of 10, thereby saving on the cost of processing credit cards. (A significant part of that cost is the time spent waiting for the card to be approved, during which the pump is unavailable.) But if this cost saving is significant, why has only one local gas station recognized it? And why is it significant only on Wednesdays?

I have suggested to my colleagues that none of us should be permitted to present ourselves to the world as economists until we figure out what this gas station is up to. Nobody has risen to the challenge. A few have suggested that perhaps the gas station owner is just a little quirky. Maybe that's right. But it would be far harder to believe that the entire dry cleaning industry is just a little quirky. Either there is enough monopoly power to sustain price discrimination, or there is some reason why women's clothes are incredibly expensive to clean and press. But I have no idea which.

[millionairemind]

Giving Your All
The math on the back of the envelope
By Steven E. Landsburg
Posted Saturday, Jan. 11, 1997, at 3:30 AM ET

CARE is a noble organization that fights starvation. It would like your support. The American Cancer Society is a noble organization that fights disease. It would like your support, too. Here's my advice: If you're feeling very charitable, give generously—but don't give to both of them.

Giving to either agency is a choice attached to a clear moral judgment. When you give $100 to CARE, you assert that CARE is worthier than the cancer society. Having made that judgment, you are morally bound to apply it to your next $100 donation. Giving $100 to the cancer society tomorrow means admitting that you were wrong to give $100 to CARE today.

You might protest that you diversify because you don't know enough to make a firm judgment about where your money will do the most good. But that argument won't fly. Your contribution to CARE says that in your best (though possibly flawed) judgment, and in view of the (admittedly incomplete) information at your disposal, CARE is worthier than the cancer society. If that's your best judgment when you shell out your first $100, it should be your best judgment when you shell out your second $100.

When it comes to managing your personal portfolio, economists will tell you to diversify. When it comes to handling the rest of your life, we give you exactly the same advice. It's a bad idea to spend all your leisure time playing golf; you'll probably be happier if you occasionally watch movies or go sailing or talk to your children.

So why is charity different? Here's the reason: An investment in Microsoft can make a serious dent in the problem of adding some high-tech stocks to your portfolio; now it's time to move on to other investment goals. Two hours on the golf course makes a serious dent in the problem of getting some exercise; maybe it's time to see what else in life is worthy of attention. But no matter how much you give to CARE, you will never make a serious dent in the problem of starving children. The problem is just too big; behind every starving child is another equally deserving child.

That is not to say that charity is futile. If you save one starving child, you have done a wonderful thing, regardless of how many starving children remain. It is precisely because charity is so effective that we should think seriously about where to target it, and then stay focused once the target is chosen.

People constantly ignore my good advice by contributing to the American Heart Association, the American Cancer Society, CARE, and public radio all in the same year--as if they were thinking, "OK, I think I've pretty much wrapped up the problem of heart disease; now let's see what I can do about cancer." But such delusions of grandeur can't be very common. So there has to be some other reason why people diversify their giving.

I think I know what that reason is. You give to charity because you care about the recipients, or you give to charity because it makes you feel good to give. If you care about the recipients, you'll pick the worthiest and "bullet" (concentrate) your efforts. But if you care about your own sense of satisfaction, you'll enjoy pointing to 10 different charities and saying, "I gave to all those!"

Here's a thought experiment for charitable diversifiers. Suppose you plan to give $100 to CARE today and $100 to the American Cancer Society tomorrow. Suppose I mention that I plan to give $100 to CARE today myself. Do you say, "Oh, then I can skip my CARE contribution and go directly on to the American Cancer Society?" I bet not.

But if my $100 contribution to CARE does not stop you from making CARE your first priority, then why should your $100 contribution to CARE (today) stop you from making CARE your first priority tomorrow? Apparently you believe that your $100 is somehow more effective or more important than my $100. That's either a delusion of grandeur or an elevation of your own desire for satisfaction above the recipients' need for food.

We have been told on reasonably high authority that true charity vaunteth not itself; it is not puffed up. You can puff yourself up with thank-you notes from a dozen organizations, or you can be truly charitable by concentrating your efforts where you believe they will do the most good.

Early in this century, the eminent economist Alfred Marshall offered this advice to his colleagues: When confronted with an economic problem, first translate into mathematics, then solve the problem, then translate back into English and burn the mathematics. I am a devotee of Marshall's and frequently follow his advice. But in this instance, I want to experiment with a slight deviation: Rather than burn the mathematics, I will make it available as a link.

I propose to establish the following proposition: If your charitable contributions are small relative to the size of the charities, and if you care only about the recipients (as opposed to caring, say, about how many accolades you receive), then you will bullet all your contributions on a single charity. That's basically a mathematical proposition, which I have translated into English in this column. If you want to see exactly what was gained or lost in translation (and if you remember enough of your freshman calculus to read the original), then click here.

[millionairemind]

If you have time, I highly recommend the book Freakconomis by Steve Levitt.... best economics book I have ever read. The conclusions will blow your mind

December 16, 2008, 1:09 pm
What Do Prostitutes and Rice Have in Common?
By Steven D. Levitt

If you believe what you read, then the answer to that question is that they are both examples of one of economics’ most elusive objects: Giffen goods. But don’t always believe what you read.

A Giffen good is a product or service for which demand rises with price. In other words, if you hold everything else constant, but the good gets more expensive, the quantity consumed will increase.

In an excellent series of guest posts to this blog earlier this year, economist Robert Jensen described his personal quest to prove that rice is a Giffen good for peasants in China.

On The Economist magazine’s Free Exchange blog, the same claim is made about prostitutes:

Less attractive and even cheaper prostitutes may still be available, but for a variety of very good reasons, the customer will not desire the cheapest option, suggesting prostitution services can be classified as a Giffen good.

Are prostitutes Giffen goods? Absolutely not. And understanding why provides a useful economic lesson.

The comparison made on The Economist’s blog is between two different types of prostitutes. As the blogger indicates, the cheaper prostitutes are less attractive and otherwise undesirable for a “variety of good reasons.”

The client who buys the services of these two types of prostitutes is buying two very different products. It is the case in every industry that high-quality products sell for more than low-quality products. Not everyone buys the cheapest car made, but that doesn’t mean that cars are Giffen goods. Not every restaurant meal is consumed at Taco Bell, that doesn’t mean that meals in restaurants are Giffen goods.

When we talk about the demand curve for a good, what we mean is how the quantity consumed for that exact same good changes with the price of that good while holding everything else constant (such as the consumer’s income, the price of other goods, etc). A moment’s reflection makes it obvious that the customer who purchases the high-price prostitute would demand just as much or more of her services if she were willing to do all the same things but at half the price. Similarly, the customer who chooses the low-price prostitute would also consume more of her services if her price were halved. If this is the case, the demand for prostitutes indeed slopes downward, just like the demand for virtually every other good known to mankind.

So how is it that rice in rural China might violate this rule? How could it be that when the price of rice rises, people actually consumer more of it? Two factors are critical.

First, rice makes up a large share of the total expenditures of these Chinese peasants. Second, if they were richer, these peasants would prefer to eat less rice and more of other things, like meat; it is just that they are too poor right now to afford much meat and they have to eat something. When rice becomes more expensive, one effect of the higher price is to make the peasants want to consume less of it (just as johns do with prostitutes who raise their prices).

In economic parlance this is known as the substitution effect. But when the price of rice rises, it also has the effect of making the peasants poorer. Their incomes haven’t changed, but the main thing they buy with their money costs more, meaning that they have to cut back their consumption of something to stay within their budgets. This pushes the peasants away from consuming luxury goods like meat, and toward consuming basic goods like rice. This is known to economists as the income effect of a price change.

For staples like rice, the substitution effect and the income effect push in opposite directions. If the income effect is bigger than the substitution effect, higher rice prices lead the peasants to feel so poor that they end up consuming more rice.

So the answer to the question posed in the title of this blog post (what do prostitutes and rice have in common?) is definitely not that both are Giffen goods.

[kennynah]

frankly, i dont know this Mr Levitt, and i have not very much doubt that he is a man of logic and education.

notwithstanding any disrespect for this person, i argue that rice is NOT a giffen good. By the very definition of giffen good, that good must exhibit an "inverse" demand curve, one that among very few produce, is diamond and certainly NOT rice.

The "inverse" demand curve of a Giffen good


if i agree with his simplistic definition that a giffen good is :

By Steven D. Levitt

a product or service for which demand rises with price. In other words, if you hold everything else constant, but the good gets more expensive, the quantity consumed will increase.

then it is to be inferred that stocks and shares are giffen goods too during a bullish trend....and that is just not logical.
(edited ....to include a more formal definition of Giffen good, which, before a priori, i could be sorely mistaken...here are the 3 preconditions :
1. the good in question must be an inferior good,
2. there must be a lack of close substitute goods, and
3. the good must constitute a substantial percentage of the buyer's income, but not such a substantial percentage of the buyer's income that none of the associated normal goods are consumed.

K's : my only disputes are
a) precondition #3, which I do not agree that a substantial portion of income is spent on rice
AND
b) that the demand curve for rice is inelastic in purist sense because should rice price rise exorbitantly, i am sure to find a mor affordable substitute or even choose an alternative staple diet ... this cannot be said of diamonds, although we do now have manmade diamonds)


i stand to be corrected; anyone, please....as i will take no offence, but with gratitude if you can teach me otherwise about the characteristic of a giffen good that even remotely suggests rice is in its classification. i thank you in advance.