Elastic demand is a term used in economics to describe the responsiveness of the quantity of a good or service demanded to a change in its price. If the quantity of a good or service demanded changes significantly in response to a small change in its price, it is said to have elastic demand. This means that the demand for the good or service is sensitive to changes in its price, and that consumers are willing to switch to other goods or services if the price of the original good or service becomes too high. In general, goods and services with many substitutes, such as beverages or clothing, tend to have elastic demand, while goods and services with few substitutes, such as gasoline or medical care, tend to have inelastic demand.

Here is an example of elastic demand: imagine that the price of apples increases significantly at your local grocery store. As a result, many consumers may decide to switch to buying pears or other fruits instead of apples, because the higher price of apples makes them less attractive compared to other options. This would cause the quantity of apples demanded to decrease significantly in response to the price increase, and the demand for apples would be said to be elastic. In contrast, if the price of gasoline increases, many consumers may not have a viable alternative to using gasoline to fuel their cars, so they may continue to buy it despite the price increase. In this case, the quantity of gasoline demanded would not change significantly in response to the price increase, and the demand for gasoline would be said to be inelastic.

Inelastic demand is a term used in economics to describe the lack of responsiveness of the quantity of a good or service demanded to a change in its price. If the quantity of a good or service demanded does not change significantly in response to a change in its price, it is said to have inelastic demand. This means that the demand for the good or service is not very sensitive to changes in its price, and that consumers are not willing to switch to other goods or services even if the price of the original good or service becomes too high.