What factors affect elasticity of demand? If a good is inelastic, what would its characteristics be?
I’m assuming you are refering to price elasticity of demand, that is how much demand responds to changes in price. Inelastic demand means that if the price changes, the quantity demanded will not change much. As pointed out above, necessities such as water are likely to have inelastic demand. However, the same good might have different elasticities at different times/to different people. For example, if the price of a cuppa at starbucks went up by 10%, would you change the number of cups you bought? If no, then your demand for starbucks coffee is inelastic. For me I would not buy starbucks coffee if the price rises, so my demand for starbucks coffee is very elastic. The same thing can apply to things like cigarettes for smokers and non-smokers… Hence the degree to which someone ‘needs’ a product is a huge influence on the price elasticity of demand. Another thing would be the availability of substitutes. IF starbucks increases its price and I stop buying from them, it doesn’t mean I
