My inspiration for this series is a great podcast from NPR called Planet Money. This summer, they did what they call “Planet Money Summer School“. I decided to do some blog posts based on these topics.
This is part 3 in my series called “Economics 101”. If you’re interested, you can start with
In this post, I’m going to talk about elastic and inelastic demand.
What exactly is the “elasticity” of demand?
The elasticity of demand refers to whether the demand for an item is flexible – that is, it will go up or down, depending on what it costs or how much income people have.
An “elastic” good would be a luxury item such as a high-end car. It can also be a “brand name” cereal – where a “no-name” option can be easily substituted.
An “inelastic” good is something people need regardless of how much the price goes up or income goes down – such as prescription drugs.
What are some samples of inelastic goods during the pandemic?
I mentioned it in a previous post – toilet paper! Also, things like sanitizing wipes and even hand sanitizer became in-elastic goods during the pandemic. Unfortunately, many people took advantage of this – and cleared out shelves, then tried to re-sell the goods at a higher price. Hopefully, this didn’t happen to you – if you were short something, you had a friend or family member who could help you. I was lucky to have a friend who makes masks and gave me several free of charge.
What’s a sample elastic good?
That would vary from person to person. We bought a lot more snacks in our family – but didn’t eat out for a month. We also didn’t buy any toys or books for ourselves or our son at all. We were lucky enough not to have our income drop, so it wasn’t a matter of our income dropping – we had nowhere to buy anything and no need to leave the house.
For others who had to deal with a loss in income, they may have bought cheaper meals (e.g. beans instead of rice) or switched to generic brands to save money on food and other products.
How were you impacted?
Now that you know what elastic vs. inelastic means, tell me about something in your life that you consider either an elastic or inelastic good!
