A lot of college juniors and seniors have to grapple with the realities of economics, and they often wonder, “What Is The Difference Between Elastic And Inelastic”. This is mostly in regard to the law of demand and supply. Well to tell the difference, then we have to define each separately first.
Elastic demand refers to when a small change in price causes a major change in the demanded quantity. On the other hand, inelastic demand refer to when a change in price does not affect the quantity demanded for a certain good at all. Essentially, elastic goods are price-sensitive while inelastic goods are price-insensitive.
So to answer the question on “What Is The Difference Between Elastic And Inelastic” then the major difference is the sensitivity to price. The second major difference of the two is the type of good. By type of good, we mean essential and non-essential goods. For instance a good that is absolutely essential to survival like gasoline for instance, s demanded the same way regardless of the price. On the other hand, a good that is non-essential, like children dolls for instance, changes sharply in demand when the price changes.
We should also have other considerations such as addictive goods. In essence, addictive substances such as cigarettes and alcohol have the same demand regardless of the price that is being floated. On the other hand, we have non-addictive goods such as new TV sets. Essentially, if they become too expensive, the buyers relent and stop buying, making those very elastic goods.
Elastic Vs Inelastic Examples
We have many examples of different elastic vs. inelastic goods in general economics. This is the biggest way of getting to understand the whole concept
Bread is one of the best examples of elastic goods. In case the price of bread increases very sharply, then consumers will take on bread alternatives or bake on their own.
In addition, The Washington Post Newspaper is also an elastic good on the virtue of being very replaceable. IN case the price they offer clients is beyond reach then the consumers will turn to competitors like the New York Times or the Chicago Tribune.
Another example would be a Lamborghini car. As much as it is a luxury item, consumers will readily buy the Maserati or Ferrari in case the price of the Lamborghini becomes too prohibitive.
Kit Kat chocolate can also be considered as a highly elastic good on two fronts. Firstly, it is a luxury good and many people may stop buying when the price becomes too high. Another way of looking at it is that the Kit Kat buyers may opt for competing brands such as Cadbury or Swiss Chocolate thus making the Kit Kat very elastic.
Finally, high-end real-estate can be considered as elastic in this light; houses consume a huge portion of the household income. This implies that a slight increase in the price will lead potential buyers to competing addresses or streets that fit their budget.
Gasoline is definitely a very prime example of an inelastic good. Essentially, whatever the price of gasoline, folks who drive gasoline cars have very few alternatives thus making the price of gas very inelastic.
In addition, we can consider Apple products as inelastic. Apple capitalizes on a cultic following of their community which is a form of addiction. This makes it very easy for the brand to sell at ridiculous prices without any change in demand.
Other than these two, gemstones would also be strongly considered as inelastic goods. Being Veblen goods, their demand actually increase with the price making them very inelastic to price changes.
We can also consider goods from monopolistic companies to be very inelastic. Case in point, football jerseys are inelastic in demand no matter how crazy the price they are priced at. Essentially, a monopoly gives the consumers a limited amount of goods just to keep them interested and excited about every release.
Finally, we have cigarettes as well as alcohol. No matter how expensive addictive substances get, the addict will be prepared to pay any price to get a relief. Thus, making these goods very inelastic to the laws of demand and price.
Hopefully, these examples answer the question of “What Is The Difference Between Elastic And Inelastic”
Difference Between Elastic And Inelastic Supply
When it comes the elasticity of supply, then it becomes very different from the elasticity of demand. Elasticity of supply refers to the different appetites that consumers have for market goods offered at different prices. In essence, this can be interpreted as the sensitivity of the supply of a good to the prevailing market prices. When speaking of the sensitivity of the supply we are mostly majoring on the suppliers of the good being either motivated to produce and release more to the market or to cut the supply of the goods they supply based on the price. We shall now answer the question of “What Is The Difference Between Elastic And Inelastic” but now from a supply perspective.
Below are some factors that may affect the elasticity of the supply of goods.
- The existence of spare production capacity
This implies that if producers have spare production capacity of a certain good, then the increase in demand will also validate an increase in the supply. If the spare production capacity does not exist, then the supply will be inelastic to price.
- Existing stock of goods or raw materials
The question of the existence of stock or raw materials arises when we have an increase in market prices. If there is stock, then the supply will be very elastic. If there is no stock, then the supply will remain inelastic.
- Ease of reallocation of the factors of production
Essentially, how easy is it to move workers from producing one line of goods to produce another? The answer to this question determines if the supply is elastic or not. If you can just move workers, then the supply is elastic. On the converse if you cannot move workers to produce the good with increased price, then the supply is inelastic.
- Speed of production
Finally, the speed of being able to produce one good is very important. For instance if macadamia nuts increase in prices, the supply will remain inelastic in a closed market. This arises because it takes ten years to plant an extra crop of macadamia and harvest the fruit in response to the market prices.
What Is The Difference Between Elastic And Inelastic Demand Quizlet
As many students may wonder, what is the main difference between the elastic and inelastic demand? Well the major difference is that the elastic demand will respond very fast to changes in price. However, the inelastic demand will not change even with changes in price.
Below are some major factors that affect the elasticity of demand:
- Nature of the commodity
- Availability of a close substitute
- Number of active uses
- Percentage of total household expenditure
- Consumer habits such a addiction
What Is Inelastic Demand
Inelastic demand can simply be defined as the tendency of the demand of a good to remain largely unaffected by the prevailing market prices. Examples of inelastic goods include:
- Goods with no substitute,
- Luxury goods,
- Goods from a monopolistic supplier
- Goods that account for a very small amount of a household income.
What Is Elastic Demand
Elastic demand refers to a demand that actively reacts to small changes in goods prices. For instance, if a good is priced by 10% more the demand would ordinarily shoot down. On the converse, if the good was priced slightly lower, then the demand of the good would shoot up very steadily.
Example of elastic demand goods are:
- Goods with very many substitutes
- Goods with several uses
- Goods supplied by many manufacturers
- Goods that comprise a huge proportion of a household income.
Generally, elasticity refers to the sensitivity of either demand or supply to changes in the price of a substance.
The elasticity of supply divides all market goods into two major categories as follows:
- Elastic supply
- Inelastic supply
The elasticity of demand divides the demand into two major groups as follows:
- Elastic demand
- Inelastic demand
The term inelastic goods can be used to describe goods whose prices are not sensitive at all to the demand or the supply. For instance, the changes of the prices of football jerseys or basketball outfits neither affects the demand of the goods nor the supply of the goods. Even when sports companies increase the prices of these goods, the numbers bought or sold remain the same.
Difference Between Elastic And Inelastic Collisions
Finally in case you are a physics or engineering major your “What Is The Difference Between Elastic And Inelastic” query may have brought you here! You may have stumbled on this article while looking for elastic and inelastic collision! Well, we are gonna give a brief on what these are here and now:
An elastic collision occurs when two objects collide and bounce off perfectly in different directions. The collusion has to preserver both momentum and kinetic energy are perfectly preserved.
An inelastic collision occurs or is said to occur when two object collide and merge to move as one, at the same velocity and direction vector. Again, it is assumed that a perfect inelastic collusion preserves both momentum and kinetic energy.