Elastic vs Inelastic Demand
Write a discussion post that identifies real world goods or services that have elastic/inelastic demand.
*Name a specific good or service that has inelastic demand (it has a steep demand curve).
*Explain why quantity demanded does not change in response to an increase or decrease in price.
*Then name a specific good or service that has elastic demand (it has a relatively flat demand curve).
*Explain why quantity demanded does change a lot in response to an increase or decrease in price.
*Which of these two goods is most likely to be taxed.
Example: The demand for gasoline is relatively inelastic. If the price of gas increases, people still have to drive to work and/or school. Therefore, when the price of gas increases people do not reduce the amount of miles they drive per week very much. Similarly, if the price decreases people won’t start driving all over the place the state just because gas is cheap. On the other hand, the demand for peanuts is relatively elastic. If the price of peanuts increases by a lot, many people would simply stop purchasing peanuts and start buying some other snack (almonds, cashews, etc.). Even if the prices for all nuts was to increase then many consumers would just start buying chips or crackers as a substitute to nuts. The availability of substitutes is the main reason that gasoline has a steeper demand curve relative to peanuts. Peanuts have a lot of substitutes, while gas for your car does not have many substitutes at all. Most people who drive are not willing to start taking the bus or riding a bicycle if the price of gasoline increases.
