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December 8, 2021 

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CAPITAL INVESTMENT: The acquisition of capital goods at the expense of consumption goods. This commonly goes by the shorter phrase "investment." Both mean essentially the same. The addition of capital merely serves to emphasize that the investment act is in fact resulting in the acquisition of capital goods.

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INELASTIC DEMAND:

The general elasticity relation in which relatively large changes in price cause relatively small changes in quantity demanded. Large changes in price cause relatively small changes in quantity demanded or the percentage change in quantity demanded is smaller than the percentage change in price. This characterization of elasticity is most important for the price elasticity of demand. Inelastic demand is one of two general elasticity relations for demand. The other is elastic demand.
An inelastic demand relation is NOT a very responsive, or stretchable, relation. The inelastic demand relation is most often directed toward demand in terms of the price elasticity of demand. In this context, demand is said to be inelastic if the percentage change in quantity is smaller than the percentage change in price. This means that buyers are not responsive to price changes.

An inelastic demand relation can fall into one of two categories--perfectly inelastic and relatively inelastic.

  • Perfectly Inelastic: Perfectly inelastic means that quantity demanded 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.

  • 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 demanded is less than the percentage change in price. Relatively inelastic demand occurs when buyers are only able to choose among a small number of imperfect substitutes-in-consumption.

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Recommended Citation:

INELASTIC DEMAND, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: December 8, 2021].


Check Out These Related Terms...

     | inelastic supply | inelastic | elastic | elastic supply | elastic demand | perfectly elastic | perfectly inelastic | relatively elastic | relatively inelastic | unit elastic | elasticity alternatives | elasticity alternatives, demand | elasticity alternatives, supply |


Or For A Little Background...

     | elasticity | coefficient of elasticity | price elasticity of demand | demand | law of demand | demand curve |


And For Further Study...

     | elasticity and demand slope | elasticity and supply intercept | demand elasticity and total expenditure | price elasticity of supply | income elasticity of demand | cross elasticity of demand | elasticity determinants |


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