|
east central PA | "inelastic demand" = A situation in which the demand for a product does not increase or decrease correspondingly with a fall or rise in its price.
Greatly affected by:
Availability of substitutes?
Necessity?
For me the story goes; I can only eat so much. However, I need a certain amount to avoid starvation. My demand for food (energy?) is somewhere in between these two amounts. If food drops to $0.00 I still only eat what I can hold. If food rises to $1 mil. I need to eat enough to stay alive.
This is a truly inelastic demand.
Few, if any, substitutes for food.
It is a necessity.
Looking at 2012:
historically high prices for corn caused substitution where possible (poultry rations went as high on wheat as feasible, natural gas industry expanded), and "starvation" (producers quit the cow business).
Demand does and has grown but this takes a new use, a new industry.
| |
|
the inelastic demand curve of corn
