What does it mean if a demand is described as inelastic?

Demand is described as inelastic when consumers do not change their purchasing behavior significantly in response to price changes. This characteristic indicates that the quantity demanded remains relatively stable, regardless of whether the price increases or decreases.

When demand is inelastic, it usually pertains to essential goods or services for which consumers have few substitutes and are less sensitive to price changes. For example, necessities like medication and basic food items often exhibit inelastic demand because consumers will continue to buy them even if prices rise, as their need for these goods does not waver.

Price elasticity of demand is a crucial concept in economics, as it helps businesses and policymakers understand consumer behavior. In contrast to inelastic demand, elastic demand would mean that a slight change in price leads to a significant change in the quantity demanded, which is not the case with inelastic demand.