Inelastic goods are products or services that are not significantly affected by changes in price. This means that the demand for these goods remains relatively constant, regardless of whether the price goes up or down. In other words, consumers will continue to purchase inelastic goods at the same rate, even if the price increases.
There are several factors that can contribute to a good or service being inelastic. One of the main factors is the necessity of the good or service. If a product is essential for a person's daily life, they are likely to continue purchasing it, regardless of price changes. For example, most people will continue to buy groceries, pay their rent or mortgage, and pay for utility services, even if the prices of these goods and services increase.
Another factor that can contribute to inelasticity is the lack of close substitutes for the good or service. If a product is unique or there are few alternatives available, consumers may be more willing to pay a higher price to continue purchasing it. For example, prescription medication is often inelastic, as there may not be many alternative treatments available for a particular medical condition.
Inelastic goods can also be found in industries that have high barriers to entry, such as the healthcare and education sectors. These industries often have high fixed costs, which can make it difficult for new competitors to enter the market. This can allow existing companies to maintain high prices, as there is less competition to drive prices down.
It is important to note that not all goods and services are inelastic. Many products, such as luxury items or discretionary items, are more elastic, meaning that demand for these goods is more sensitive to price changes.
In conclusion, inelastic goods are products or services that are not significantly affected by changes in price. These goods are often essential for daily life, have few close substitutes, or are found in industries with high barriers to entry. Understanding the concept of inelastic goods can be helpful for businesses as they consider pricing strategies and for consumers as they make purchasing decisions.
Inelastic Demand Examples
For example, the supply of rented accommodation in London is inelastic because it is hard to find new places to build property. Examples of products with elastic demand Elastic goods typically have lots of substitutes. Consumer durables are an example of a product having an elastic demand. Inelastic items include fuel, essential meals, and pharmaceuticals. The difference between inelastic and elastic demand lies in how easily things can impact consumer habits. What is inelastic demand example? Is water elastic or inelastic? Salt Tap water Diamonds Cigarettes Apple iphones , ipads Telephone services Inferior goods like jawar, millet etc which is not consumed by many people in comparison to rice and wheat. Solution Consumers behave differently toward different products depending on their needs, requirements, and taste.
Inelastic supply
However, this statement is not always true as the demand for luxury goods may be elastic in lower and medium income groups, but can be inelastic in upper class. Is Sugar elastic or inelastic? Moreover, the consumption of necessities cannot be postponed; therefore, the demand for necessities is inelastic. In this article, we will discuss the practical examples of inelastic demand. Is Pizza elastic or inelastic? An example of this would be insulin, which is needed for people with diabetes. Is Salt inelastic or elastic? It may be able to get workers to do some overtime, but at some point, it will meet capital limits, and it cannot increase supply without long-term capital investment.
Examples of Inelastic Goods
This is because after a while, people would get used to taking the bus, some might even move closer to their workplace, and some might ration their gasoline by changing their lifestyle. However, since Adidas is an established company, there is every possibility that theyve done their homework, and have calculated that decrease in demand wont surpass 10%. Margarine, which is substantially less expensive than butter, is a good example of this sort of product. Download our list of inelastic goods eBooks for free and learn more about list of inelastic goods. This is because, most people buying those clothes already have enough to satisfy their clothing needs, with any additional unit of such clothings being a mere want or a means to satisfy their desires.
Inelastic Demand
Sugar is a necessity of goods, it has a weak alternative, therefore considered inelastic demand. The figure below illustrates perfectly inelastic demand. An example of this would be diamonds. According to their findings, the value for the milk category is 0. In the long run, though, more options are available, such as purchasing a more fuel-efficient car or choosing a job that is closer to where you work. They are often luxury items, services or plans.
