Can you give me illustrations that demonstrate the principles of elastic and inelastic demand?

Answer 1

Elasticity is the concept based on the consumer behaviour (basically demand) on changes in prices.

Elastic Demand

Case: consumers by 1000 units of product A at a price of $10, but due to the change in price, which is $11 unit purchases had fallen by 10% (100 units). But the price had fallen to 9 and demand had risen to 1100 units.

Proportionate Change%
|Demand| % |Price ($)| %
1- 1000 10
2- 900 - 10 11 +10
3- 1100 +10 9 - 10

Study:
1- the price of the product once risen by 10% demand fell in "PROPORTION" to the increase in price, which is 10% --900 units.

2- the price decrease was also effectively resulting with the proportional change effect.

Conclusion:
If the price and demand change in proportion or even more than proportion (more than 1) it is an elastic demand. The responsiveness of consumers is equal or even more than the change in price.


In-Elastic Demand

Case: consumers by 1000 units of product A at a price of $10, but due to the change in price, which is $11 unit purchases had fallen by 5% (50 units). But the price had fallen to 9 and demand had risen to 100 units.

Proportionate Change%
|Demand| % |Price ($)| %
1- 1000 10
2- 950 - 5 11 +10
3- 1050 + 5 9 - 10

Study:
1- the price of the product once risen by 10% demand fell in "less than PROPORTION" to the increase in price, which is 5% --50 units.

2- the price decrease was also effectively resulting with the less than proportional change effect.

Conclusion:
If the price and demand change in less than proportion (less than 1) it is an inelastic demand. The customers response rate is less effective to the change in price.

Answer 2

Graphically I always remember inelastic demands easily because the are a vertical line which resembles an I for Inelastic, and elastic demands because it is a horizontal line which cupled with the axes in a graph closely resemble an E for Elastic

Answer 3

Elastic is something stretchy
Inelastic is something that after stretching can not go back to it's original shape. ex: the elastic in my underwear has lost it's shape