Inelastic demand
If demand is inelastic, i.e.
Proportionate change in quantity demanded of X
Proportionate change in price of X
A given change in price leads to a smaller change in quantity demanded.
Figure 2. 30 (a)). The demand responds less than proportionately to
change in price. Consumers do not react very much to changes in price.
change in price. Consumers do not react very much to changes in price.
If the price of the commodity increases, the demand for the commodity; declines by only a smaller percentage. A one percent increase in price results into a less than one percent decline in quantity demanded.
Demand is usually inelastic for commodities that have no good
substitutes (e.g. medicine), cheap commodities (e.g. razor blade, banana leaves) am essential commodities (e.g. salt).
substitutes (e.g. medicine), cheap commodities (e.g. razor blade, banana leaves) am essential commodities (e.g. salt).