Inelastic vs. Elastic Demand: Understanding The Key Differences

Elastic and inelastic demand highlight important dynamics in a market economy. They influence business decisions and policy-making by providing insights into consumer behavior. By analyzing how demand for different products reacts to economic factors, firms can strategize on pricing, while governments can consider the implications for taxation and subsidies.

The Main Difference between Inelastic and Elastic

Inelastic vs. Elastic Demand: Understanding The Key Differences

Inelastic vs. Elastic: Key Takeaways

  • Elastic demand fluctuates significantly with price changes, while inelastic demand does not.
  • Understanding demand elasticity informs pricing strategies and economic policies.
  • Demand elasticity is determined by the availability of substitutes, necessity of the good, and proportion of income spent.

Inelastic vs. Elastic: the Definition

What Does Inelastic Mean?

Inelastic demand refers to a market situation where the demand for a product does not significantly change with a price adjustment. When we talk about goods with inelastic demand, we mean:

  • Price changes have a minimal impact on the quantity demanded.
  • Consumers consider these goods as necessities, often with few close substitutes.
  • Typically, these products take a small portion of income, so price fluctuations are less likely to affect the purchasing decision.

What Does Elastic Mean?

In contrast, elastic demand indicates a scenario where demand for a product greatly changes in response to price changes. Goods with elastic demand exhibit the following behaviors:

  • Price changes result in a significant change in the quantity demanded.
  • These items usually have plenty of alternatives, so consumers can easily switch if the price rises.
  • The products often represent a larger proportion of income, making consumers more sensitive to price changes.

Inelastic vs. Elastic Usage and Examples

Inelastic Demand: We find that in inelastic demand, changes in price have less effect on the quantity demanded. This typically occurs in goods or services that are necessities or have fewer substitutes. For example, insulin for diabetics is inelastic – despite price changes, the quantity demanded remains relatively stable.

Examples of inelastic demand products or services include:

  • Medications
  • Electricity
  • Water

Elastic Demand: On the other hand, we see that with elastic demand, the quantity demanded is sensitive to price changes. This often happens with luxury items or goods with many substitutes. Take, for instance, the market for soft drinks. If one brand becomes more expensive, consumers can easily switch to another, showing elastic behavior.

Examples of elastic demand products or services include:

  • Soft drinks
  • Fashion clothing
  • Electronics

Tips to Remember the Difference

  • Inelastic contains the word “less”, hinting at less sensitivity to price changes.
  • Elastic has the letter “e” which can stand for “extensive change” in demand relative to price.

Inelastic vs. Elastic: Examples

Example Sentences Using Inelastic

  • Gasoline: Even when prices increase, our need to drive to work or school doesn’t just disappear. This is why we say, “Our demand for gasoline tends to remain steady despite price hikes.”
  • Prescription drugs: If we’re prescribed medication we need for our health, our demand for these drugs remains consistent; the price doesn’t often change how much of it we purchase.

Example Sentences Using Elastic

  • Cinema Tickets: If a movie ticket gets too expensive, we might say, “Let’s skip the theater and watch a movie at home instead.”
  • High-End Chocolate: As prices rise, we might find ourselves saying, “This chocolate is getting too pricey; maybe we’ll try a different treat.”

Related Confused Words

Inelastic vs. Inflexible

Inelastic refers to a situation in which the quantity demanded or supplied of a product changes very little when the price changes. However, inflexible more broadly means something is not capable of changing or unwilling to change. It isn’t a term usually used in economic contexts but can refer to attitudes, schedules, or materials. Inflexible doesn’t measure the same economic responsiveness as inelastic does.

For example:

Inelastic (Economics)

  • Medication: Patients who require a specific prescription drug will generally continue to purchase it regardless of price changes, indicating that the demand for certain medications is inelastic.
  • Salt: As a basic seasoning and food preservative, the quantity of salt demanded doesn’t significantly change with its price, so it has inelastic demand.

Inflexible (General Use)

  • Work Schedule: John’s work schedule is inflexible, meaning he cannot change his work hours or take days off without advance notice.
  • Material Property: The inflexible steel beam could not be bent or twisted, making it ideal for construction where rigidity is needed.

Elastic vs. Resilient

On the other hand, elastic is used to describe a condition where the quantity demanded or supplied of a product changes significantly due to a change in price. A good with elastic demand will see a substantial decrease in demand if the price increases. Resilient, while sometimes used interchangeably with elastic in everyday language, actually conveys a different quality. It characterizes a material’s or entity’s ability to return to its original state after undergoing stress.

For example:


  • Rubber Band: When you stretch a rubber band and release it, it quickly snaps back to its original shape, demonstrating its elastic properties.
  • Elastic Fabric: Spandex is known for its elasticity, allowing clothes made from it to stretch comfortably around the body and then return to their original size.


  • Mental Resilience: After facing a personal setback, Anna showed her resilience by maintaining a positive attitude and working toward new goals.
  • Resilient Flooring: Cork floors are resilient; they can recover from the pressure of furniture legs and foot traffic, maintaining their shape and integrity over time.