Elastic Demand

Elastic Demand

Elastic Demand Jonathan Poland

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.

Learn More
What is a Business Case? Jonathan Poland

What is a Business Case?

A business case is a document that presents a proposal for a project, strategy, or course of action. It is…

Market Potential Jonathan Poland

Market Potential

Market potential is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. Market potential is usually measured either by sales value or sales volume.

Modular Products Jonathan Poland

Modular Products

Modular products are products that are made up of standardized, interchangeable parts or modules that can be easily assembled and…

Marketing Communications Jonathan Poland

Marketing Communications

Marketing communications refers to the various forms of communication that are utilized in order to achieve marketing goals. These channels…

Value Added Reseller Jonathan Poland

Value Added Reseller

A value added reseller (VAR) is a company that buys products from manufacturers or distributors and then resells them to…

Performance Goals Jonathan Poland

Performance Goals

Performance goals are targets or objectives that are set for an employee’s work, typically in collaboration with their manager. These…

Concept Selling Jonathan Poland

Concept Selling

Concept selling is a approach to marketing and sales that involves framing unique selling propositions as a story that customers…

Soft Launch Jonathan Poland

Soft Launch

A soft launch is a product launch that is limited in scope, such as a release to a small group…

Customer Service Jonathan Poland

Customer Service

Customer service is the practice of providing support, assistance, and guidance to customers before, during, and after a purchase. This…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

Accounts Receivable Jonathan Poland

Accounts Receivable

Accounts receivable (AR) are the outstanding amounts owed to a business by its customers for goods or services provided on…

Total Addressable Market Jonathan Poland

Total Addressable Market

A total addressable market (TAM) is the total potential revenue that a company can generate from its products or services…

What is Promotion? Jonathan Poland

What is Promotion?

Promotion refers to any marketing strategy that is aimed at increasing recognition, awareness, and interest in a brand, product, or…

Market Entry Strategy Jonathan Poland

Market Entry Strategy

A market entry strategy is a plan for introducing products and services to a new market. This can provide an…

Administrative Skills Jonathan Poland

Administrative Skills

Administrative skills are abilities and personality traits that enable a person to be efficient and organized in a workplace setting.…

Conceptual Framework Jonathan Poland

Conceptual Framework

A conceptual framework is a theoretical structure that represents and organizes a set of concepts and ideas. It is used…

Sentiment Analysis Jonathan Poland

Sentiment Analysis

Sentiment analysis is the process of analyzing and extracting subjective information from text data. It is a type of natural…

Stability Jonathan Poland

Stability

Stability is the ability of a system, organization, or individual to maintain its current state or condition despite external pressures…

Curiosity Drive Jonathan Poland

Curiosity Drive

Curiosity drive, or the desire to obtain new information, is a fundamental human motivation that drives learning and exploration. In…