The degree to which a demand or supply curve reacts to a change in price is the
curve's elasticity. Elasticity varies among products because some products may
be more essential to the consumer.
Products that are necessities are more insensitive to price changes because consumers would continue buying these
products despite price increases. Conversely, a price increase of a good or
service that is considered less of a necessity will deter more consumers because
the opportunity cost of buying the product will become too high.
A good or service is considered to be highly elastic if a slight change in price
leads to a sharp change in the quantity demanded or supplied. Usually these
kinds of products are readily available in the market and a person may not
necessarily need them in his or her daily life.
On the other hand, an inelastic good or service is one in which changes in price witness only modest changes in
the quantity demanded or supplied, if any at all. These goods tend to be things
that are more of a necessity to the consumer in his or her daily life.
