What Is the Difference Between Elastic and Inelastic Demand?
The concepts of elastic and inelastic demand are used in economics to describe change processes, and the differences between the terms are defined by the amount of change occurring within a given system. Areas of economic study related to supply and demand utilize these concepts.
Elastic demand means that the amount or quantity of a certain product changes in large measure when the price of the product changes, particularly when the percentage of change in the quantity of the product being demanded is greater than the change in price. Inelastic demand means that the amount or quantity of a certain product changes in small measure when the price of the product changes, particularly when the percentage of change in the quantity of product being demanded is less than the change in price. Elasticity and inelasticity relate to the magnitude of change within the system.
Elastic and inelastic demand are measured as the percentage of change in the demand for something divided by the percentage of change in price. Similarly, elastic and inelastic supply are measured as a percentage of change in the supply of something divided by the percentage of change in price. Elasticities are recorded as negative numbers, since demand curves are always negative sloping.
