Price Inelastic Product Demand

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A Price Inelastic Product Demand is a price inelastic demand that applies to a negative price elasticity of product demand (for product demand change and product price change).



    • An economic term used to describe the situation in which the supply and demand for a good or service are unaffected when the price of that good or service changes. Inelastic means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.

      Economics textbooks define “inelastic” as meaning that a 1% change in the price of a good or service has less than a 1% change on the quantity demanded or supplied. For example, if the price of an essential medication changed from $200 to $202 (a 1% increase) and demand changed from 1,000 units to 995 units (a less than 1% decrease), the medication would be considered an inelastic good. If the price increase had no impact whatsoever on the quantity demanded, the medication would be considered perfectly inelastic. Economics textbooks depict the demand curve for a perfectly inelastic good as a vertical line, because the quantity demanded is the same at any price. Supply could be perfectly inelastic in the case of a unique good such as a painting. No matter how much consumers are willing to pay for it, there can never be more than one original version of that painting. ...