Inelastic demand is an economic term that refers to the situation where the quantity demanded of a good or service does not change proportionately with a change in its price. In other words, when the price of a product goes up or down, the quantity demanded remains relatively constant. Demand for a good is said to be inelastic when the elasticity is less than one in absolute value. Some examples of products with inelastic demand include:

• Necessities: Products that are essential for daily life, such as food, water, and electricity, tend to have inelastic demand because people need them regardless of the price.

• Addictive products: Products that are addictive, such as tobacco and drugs, tend to have inelastic demand because people are willing to pay a high price to satisfy their addiction.

• Products with no close substitutes: Products that have no close substitutes, such as a specific brand of medication, tend to have inelastic demand because people have no other options.

Inelastic demand is often contrasted with elastic demand, which occurs when the quantity demanded changes significantly in response to a change in price. Elastic goods include luxury items and certain food and beverages, as changes in their prices affect demand.

The formula for calculating elasticity is the percentage change in quantity demanded divided by the percentage change in price. If the result is less than one, demand is inelastic. If the result is greater than one, demand is elastic. If the result is exactly one, demand is unit elastic.

In practice, demand is likely to be only relatively elastic or relatively inelastic, that is, somewhere between the extreme cases of perfect elasticity or inelasticity.