Inelastic Demand
Quantity is insensitive to a change in price.
INelastic - INsensitive If price increases, quantity demanded will fall a little. If price decreases, quantity demanded increases a little. People will continue to buy it regardless of price change. An Inelastic Demand Curve is steep (looks like an 1)
General Characteristics of Inelastic Goods
- Few Substitutes
- Necessities
- Small portion of income
- Required now rather than later
- Elasticity coefficient is less than 1
For example:
Water & electricity - basic utilities
Cigarettes / tobacco - addicted