GENERAL KNOWLEDGE

Detailed explanation-1: -The demand for necessities is inelastic. By inelastic demand we mean that as the price of the commodity changes the quantity demand does not change. The consumer will not buy lesser of the commodity of the price increases. Example :-Life saving medicine.

Detailed explanation-2: -The demand for necessities or necessary goods is inelastic because whatever may be the changes in the price of these goods, their demand does not change drastically. For example demand for milk, salt, etc.

Detailed explanation-3: -Inelastic demand is when a buyer’s demand for a product does not change as much as its change in price. When price increases by 20% and demand decreases by only 1%, demand is said to be inelastic. This situation typically occurs with everyday household products and services.

Detailed explanation-4: -Necessities vs luxuries: The demand for necessities is inelastic while the demand for luxuries is elastic. Definition of the market: A narrow definition of the product tends to result in more elastic demand, because of the availability of close substitutes.