Elasticity of Demand
Elasticity of demand is an important concept within the consumer sphere. Businessdictionary.com defines “elasticity of demand” as
The degree to which demand for a good or service varies with its price.
The typical play is for demand to INCREASE as price DECREASES and vice versa. I will buy one delicious Cadbury Cream Egg if they are a dollar apiece. I will buy two if they are 75 cents apiece and I might well buy none if they go up to five bucks apiece.*
A good or service is said to be “elastic” if this variance is very strong- for instance, when the cost of a car goes down the company might sell more cars. In that case (indeed, in most cases) cars are said to be “elastic”. An example of an “inelastic” product is one that people just need regardless of price. Necessities like bread and toothpaste are examples of inelastic products.
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*All lies. I will buy as many of those heavenly confections as will fit in my sadly INelastic pants pockets no matter the cost. They are the greatest things ever. I live for them and through them. All praise be to Cadbury.
