Furniture, cars, televisions, jewelry and phones are examples of elastic goods. They are luxuries. Food grains, vegetables, milk, gas and electricity are some examples of inelastic goods. They are necessities.
Elastic goods have many substitutes, and people can live without them. An increase in their price leads to a significant change in their demand. If jewelry prices increase, a consumer can simply go without them. Inelastic goods are essentials, and a change in their prices leads to an insignificant change in their demand. If food prices increase, people will still buy.
Two types of elastic goods are price elastic goods and income elastic goods. Price elastic goods include sports cars. An increase in their prices leads to a decrease in their demand and vice versa. Consumers buy cheaper brands instead.
Income elastic goods change according to the income levels of the person. When income increases, demand increases. The opposite is also true. Diamonds are income elastic.
Inelastic goods are also categorized into price inelastic and income inelastic. Price inelastic goods include milk. If milk prices increase, customers can choose to use powder milk. Income inelastic goods are affected by income. If consumers' incomes increase, they may opt to buy fresh produce instead of frozen or canned varieties.