Elastic demand

Elastic demand is used when the demand for certain goods changes significantly due to price fluctuations. For example, if the price of a commodity is lowered, sales of this product increase. If the price is increased, then consumers buy less of this product.
The elastic demand is usually given in percent. This value arises from the change in the demand for a commodity compared to the relative change in the price of this commodity. The percentage ranges between zero and infinity, but it has to be greater than one in order to speak of elastic demand.

Elastic demand

A good and easy-to-understand example of elastic demand is luxury goods such as watches. You don't necessarily need these goods to live, so you don't necessarily have to buy them. If the price of watches now rises, consumers will buy less of them. If, on the other hand, the price of the watches is lowered, the demand for this product increases and consumers buy more of it.

It is very similar with luxury travel. If the price for these is raised, consumers prefer to opt for cheaper trips or postpone them entirely. However, if the travel price drops, many consumers choose it, often spontaneously without prior planning.
Not elastic (= inelastic), on the other hand, is the demand for staple foods, for example, because these are essential to life and even if the price of these goods increases, they are consumed.


  • the relative change in demand dependent on a change in price
  • has a percentage between one and infinity
  • mostly luxury or substitute goods are affected by the elastic demand
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