Inelastic Demand
Inelastic demand is a term used in economics to describe a situation in which the quantity of a good or service demanded does not change significantly in response to a change in its price. In other words, the demand for a good or service is relatively insensitive to changes in its price. This is in contrast to elastic demand, which is when the quantity of a good or service demanded changes significantly in response to a change in its price.
History of Inelastic Demand
The concept of inelastic demand has been around since the early days of economics. It was first introduced by the French economist Jean-Baptiste Say in the early 19th century. Say argued that the demand for a good or service is inelastic when the price of the good or service is relatively low compared to the income of the consumer. This means that even if the price of the good or service increases, the consumer will still be willing to purchase it.
In the 20th century, the concept of inelastic demand was further developed by economists such as Alfred Marshall and John Maynard Keynes. Marshall argued that the demand for a good or service is inelastic when the good or service is a necessity for the consumer. Keynes argued that the demand for a good or service is inelastic when the good or service is a luxury for the consumer.
Comparison Table
| Demand Type | Price Change | Quantity Change |
|---|---|---|
| Elastic | Significant | Significant |
| Inelastic | Significant | Insignificant |
Summary
Inelastic demand is a term used in economics to describe a situation in which the quantity of a good or service demanded does not change significantly in response to a change in its price. This is in contrast to elastic demand, which is when the quantity of a good or service demanded changes significantly in response to a change in its price. The concept of inelastic demand has been around since the early days of economics and has been further developed by economists such as Alfred Marshall and John Maynard Keynes. For more information about inelastic demand, you can visit websites such as Investopedia, The Balance, and Khan Academy.
See Also
- Elastic Demand
- Price Elasticity of Demand
- Income Elasticity of Demand
- Cross Elasticity of Demand
- Substitution Effect
- Income Effect
- Price Floor
- Price Ceiling
- Supply and Demand
- Law of Demand
