Where is the elasticity of demand, given the change in the price of a commodity in response to a change in its price (e.g., a 5% decrease in its price and a 15-20% increase in its demand). In addition, objects can be elastic and inelastic.
Elastic Goods – When a fall in the price causes a relatively greater proportion of the increase in demand, then such goods are called elastic goods. These items are usually luxury items.
Elastic Goods – When a decrease in price brings a relatively small proportion of the increase in demand, such as a 10% decrease in price, a 7% increase in demand, or no increase at all, then such goods are called inelastic goods. These items are essential commodities like salt.
