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What is meant by elasticity of demand and inelasticity of demand?
Price. Can anyone give me some examples to aid in the understanding?
how about the definition of it?
inelasticity demand would include water and air. Not that we necessarily "buy" it on the open market, - but we need what we need.
elasticity would include DVD / movies. Dropping prices (or raising prices) by 1/3 may cause sales to increase / decrease by 100%
Just a guess, if increasing gasoline prices by 10% does NOT reduce demand by the 10%, then that's IN-elastic.
Elastic demand: The generic groceries at the store. If price goes up a little, everyone will just switch to the generic brand at another store. (People buy less if price goes up)
Inelastic demand: Oil. Everyone thinks they gotta have it, any price. (People keep buying, even when price goes way up)
Source(s)by Jerry Lee - 6 years ago