Elastic and Inelastic Demand
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Can you think of a product and/or service that would characterize elastic demand? Inelastic demand?
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Solution Summary
The solution gives examples of elastic and inelastic demand.
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A product that might have elastic demand is MP3 players. These sorts of music players are not necessities and so if their price increases by even a small amount, there might be a big decrease in their demand. This is because people do not have to pay the higher price for such an item. They can easily live without this product. Thus the demand is very elastic. On the other hand, if price drops by a small amount, a lot of people might want to buy this product because they may perceive it as 'cheap'. The same holds true ...
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