Inelastic Demand
Plain definition
Demand is inelastic when quantity demanded responds proportionally less than price changes — price elasticity below 1 in absolute value. A 10 percent price rise cuts quantity by less than 10 percent, so total revenue rises with price.
In economics
Inelastic demand characterizes necessities and goods with few substitutes: medicines, petrol, salt. It explains why taxes on such goods raise steady revenue with small quantity distortions, and why monopolists facing inelastic demand can raise prices profitably. Perfectly inelastic demand (elasticity 0) is the vertical-curve extreme.
Example
Insulin demand is highly inelastic: even a large price increase barely changes the quantity diabetics buy, because there is no substitute and the need is urgent. A 25 percent price rise might cut quantity by only 1 percent, so sellers' revenue climbs.
Inelastic is often misread as consumers do not respond at all. They do respond — just proportionally less than the price moved. Zero response is the special case of perfectly inelastic demand. Also, inelastic demand does not mean demand is small — a huge market can be thoroughly inelastic.