Elastic and inelastic demand

Elastic and inelastic demand are two concepts used in economics to describe the responsiveness of demand for a product or service to changes in its price.

Elastic demand refers to a situation where the quantity demanded of a product or service changes significantly in response to a change in its price. In other words, when the price of the product or service goes up, the quantity demanded falls significantly, and when the price goes down, the quantity demanded increases significantly. Elastic demand is characterized by a relatively flat demand curve. Examples of products with elastic demand include luxury goods, vacations, and restaurant meals.

Inelastic demand, on the other hand, refers to a situation where the quantity demanded of a product or service changes relatively little in response to a change in its price. In other words, when the price of the product or service goes up, the quantity demanded falls only slightly, and when the price goes down, the quantity demanded increases only slightly. Inelastic demand is characterized by a relatively steep demand curve. Examples of products with inelastic demand include gasoline, cigarettes, and medication.

Elastic demand:

1. Quantity demanded changes significantly in response to a change in price.
2. Demand curve is relatively flat.
3. Examples of products with elastic demand include luxury goods, vacations, and restaurant meals.
4. Businesses can increase revenue by reducing the price of a product with elastic demand.

Inelastic demand:

1. Quantity demanded changes relatively little in response to a change in price.
2. Demand curve is relatively steep.
3. Examples of products with inelastic demand include gasoline, cigarettes, and medication.
4. Businesses may not be able to increase revenue by reducing the price of a product with inelastic demand.