Examples of products that have elastic supplies are specifically branded items that have alternatives like Campbell's soup, Marlboro cigarettes and Porsche vehicles; products that have inelastic supplies are cigarettes, gasoline and salt. Products that have an inelastic supply are products that do not have a viable alternative, and buyers will continue to buy them despite the price increase.Continue Reading
When a product has an elastic supply, the product has many alternatives. Users of the product will be able to go elsewhere or use a different brand if the one they like increases in price. Many luxury products, such as sports cars and organic food, are elastic. Users can go elsewhere for the products but often will not do so to sacrifice the luxury of the products.
An inelastic product is one that cannot be replaced with a less expensive version. When tobacco prices rise, most cigarette prices rise. People who smoke cigarettes will usually continue buying the cigarettes despite their price because they are addicted to them. Gasoline is also a necessity for transportation. Despite the higher costs of gasoline, people will often continue to buy it. While different gasoline companies may offer lower prices, the price remains a steady average because companies know that people will continue to buy it.Learn more about Economics