What is INELASTIC DEMAND? (BEST Definition and TOP Examples)

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Inelastic Demand Explained ⬇️
Inelastic demand refers to a situation where changes in the price of a product or service result in proportionately smaller changes in the quantity demanded. In other words, when the price of a good increases or decreases, the quantity demanded doesn't change much.
Best way to understand INELASTIC DEMAND ⬇️
Let's consider an example to illustrate inelastic demand:
Imagine you own a small coffee shop in a town where there are no other coffee shops nearby. Your loyal customers have developed a habit of visiting your shop every morning to buy their favorite coffee before heading to work. Now, let's say you decide to increase the price of your coffee by 20%.
Despite the price increase, most of your regular customers continue to buy coffee from your shop because they value the convenience and quality of your product. Some may grumble about the price hike, but they're willing to pay a bit more rather than change their routine or sacrifice the quality of their coffee.
In this scenario, the demand for your coffee is considered inelastic because the change in price didn't significantly affect the quantity demanded. Even though the price increased, the quantity demanded remained relatively stable. In other words, the percentage change in price is greater than the percentage change in quantity demanded, resulting in an elasticity coefficient of less than 1.
Inelastic demand is often observed for essential goods or services, products with limited substitutes, or products that consumers perceive as necessities rather than luxuries.
How to Understand Elasticity (Economics) ⬆️
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