Inelastic demand

What is inelastic demand?

Inelastic demand is that price elasticity of demand where the demand suffers little or no variation when there is a change in the price of the product.

When a product with inelastic demand is given, the variation in its price does not represent a significant change in its demandbut only a proportionally insignificant change. This type of demand usually occurs with products that do not have substitute goods.

In this way, if the price of a product with inelastic demand increases, its demand will decrease only a little, or not at all, so it will be almost priceless.

Inelastic demand graph

In the graph below, it can be seen that although the price increases, the fall in demand is not so significant.

Inelastic demand graph.

Although it is difficult to find a good that applies to this concept, we could say that insulin for diabetics, for example, is a perfectly inelastic good, since it is necessary for them to live.

That said, the perfectly inelastic demand is graphed as follows:

Graph of perfectly inelastic demand.

Inelastic demand and elastic demand

Although these terms often seem similar, there are important differences between them:

Example of goods with inelastic demand

Some examples of goods that have inelastic demand are the following:

• The Water, since it is a necessary good to live and that no matter how much it increases in price, it will not stop consuming.
• Medicines necessary to live, such as insulin for people with diabetes.
• Cigarettes and other additives, since it does not matter that they vary in price, whoever consumes them frequently will acquire them the same.
• The natural gas it is also an inelastic good.