However, other relations can also be thought of as inelastic. For example, demand might be inelastic relative to income. In this case, relative large changes in income are needed to trigger relatively small changes in demand.

Demand and Supply

• Demand: Inelastic demand exists if relatively large changes in price cause relatively small changes in quantity demanded. Inelastic demand means that changes in the quantity demanded are not very responsive to changes in the price. An inelastic demand has a coefficient of elasticity less than one (with the negative value ignored).


• Supply: Inelastic supply exists if relatively large changes in price cause relatively small changes in quantity supplied. Inelastic supply means that changes in the quantity supplied are not very responsive to changes in the price. An inelastic supply also has a coefficient of elasticity less than one.

Perfect and Relative

• Perfectly Inelastic: Perfectly inelastic means that quantity demanded or supplied is unaffected by any change in price. In other words, the quantity is essentially fixed. It does not matter how much price changes, quantity does not budge. Perfectly inelastic demand occurs when buyers have no choice in the consumption of a good. In an analogous way, perfectly inelastic supply occurs when producers have no choice of the resources used in the production of a good.


• Relatively Inelastic: Relatively inelastic means that relatively large changes in price cause relatively small changes in quantity. In other words, quantity is not very responsive to price, but it does change. More specifically, the percentage change in quantity is less than the percentage change in price. Relatively inelastic demand occurs when buyers can choose only among a small number of imperfect substitutes-in-consumption. In an analogous way, relatively inelastic supply occurs when producers are able to switch resources among a small number of imperfect substitutes-in-production.