Is piped drinking water drinkable in India? If it's drinkable, is it chargeable? Both the answers are a big "No" in New Delhi. However, bottled, private mineral water is priced in New Delhi. The early classes of the micro foundations of economics made us to think in the following way - a) A good which is a normal good has a negative price elasticity of demand whereas for a luxury good the same demand curve is positive.
Thus if the price of a luxury good increases then the quantity demanded of the same good goes up due to income effect. On a similar note, for a normal good if the price increases the quantity demanded of the normal good falls down. In this way, if there is no clean piped drinking water in New Delhi, and only reliable clean drinking water for middle and upper income class households is bottled mineral water, will it's consumption go down for such households if the price goes up. The answer to this is too a big "No". Then why water which is so necessary and normal as a good for survival is often not priced whereas diamond which is not necessary for human survival is still priced high when people consume diamond in the form of wearing a jewellery from South Ex shops of New Delhi.
Well, I got an answer to this paradox a month back while treating my international guests with a glass of wine in a well known restaurant of Khan Market of New Delhi. As a host during the dinner in the well known lutyens location of Khan Market when I ordered for a bottle of wine for my guests it was charged. The bottle of wine, in the location of Khan Market acted as a normal good. However in the same restaurant and during the same dinner, when I only consumed 10 ml red wine in comparison to the entire crowd who were ordering bottles of wine, my 10 ml wine was uncharged by the restaurant. They gave a price signal that in the relative positioning space of a consumerist society and a typical lutyens Delhi restaurant, 10 ml wine was almost like a free water and was free, uncharged while other bottles of wine were charged as a normal good.
I understood, how, class, consumption, relative welfare position of a consumer in a society was making the same red wine free (in marginal amount of 10 ml) for one and chargeable for others. I could realise when the same good transforms to be a normal to a luxury across societal classes based on the social, consumerism culture. In my micro foundation class of economics, I experienced how - "Water and Wine can both become a free good in a society" in a completely paradoxical and antithetical way. Possibly microeconomics needs to be written in a new way with "Water and Wine"!
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