Price-Inelastic Demand

What is Price-Inelastic Demand?

Demand is described as price-inelastic when the percentage change in quantity demanded is proportionately smaller than the percentage change in price that caused it. Demand tends to be inelastic where there are few substitutes, where the product is a necessity or strongly branded, and where it takes only a small share of income, so a price rise is likely to increase total sales revenue.

This definition is part of the Marketing chapter in Cambridge O Level Business Studies.

Concepts related to Price-Inelastic Demand

• necessity
• few substitutes
• brand loyalty