Which of the following is likely to have the most price inelastic demand?

What Is Meant by Inelastic Demand?

When something has an inelastic demand it means the demand doesn’t change as often as the price.

The perfect example is gasoline!

For example, the price of something could go up 30% but the demand only goes down by 2%.

Inelastic demand is normally associated with items that are needed rather than wanted or desired.

Inelastic often means there is less choice for these products which means the demand doesn’t change as much as the price does.

Inelastic Products

Some examples might be:-

  • Gasoline in the short run
  • Medical supplies like drugs and prescriptions
  • Utilities like electric and gas

These are all things that we need to get by in life.

Elastic Products

On the flip side, things that said to be elastic might be things like:-

  • Designer clothes
  • Fast and luxury cars
  • Specific brands when there plenty of alternatives

These are things that we don’t generally need but desire.

The market (i.e. customers) tend to be much more sensitive to any price change and the demand will change with it.

If your favorite tin of soup goes up by $2, you might not be willing to pay for it as there’s likely to be alternatives on the market.

About the author

Oliver graduated from law school in 2008 and has practiced exclusively in the field of civil litigation for the last 10 years. He has a wealth of experience and expertise in litigation involving complex quantum and large financial losses. He has achieved numerous 7 figure settlements and has been involved in multi-billion dollar class-action consumer lawsuits against companies such as the Volkswagen Group. Away from the law, he is a personal finance writer and digital marketer.

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