Question

What is the definition of elastic demand? How about inelastic demand? Give me some examples of...

What is the definition of elastic demand? How about inelastic demand? Give me some examples of goods that you purchase for which your own demand is elastic and some examples of goods for which your demand is inelastic.

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Answer #1

An elastic demand is defined as one where a change in the price of the product leads to a significant change in the demand for that product. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the elasticity quotient is greater than or equal to one, the demand is considered to be elastic.

An inelastic demand is defined as one where a change in the price of the product does not significantly impact the demand for that product. So when the price goes up, consumers will not change their buying habits. The same applies when the price goes down. Inelastic products are necessities and, usually, do not have substitutes.

Examples of goods which have elastic demand are: Hero Cycle, LCD TV, Cotton Shirt etc.

Examples of goods which have inelastic demand are: H1N1 Vaccine, Cigarette etc.

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