What is meant by inelastic demand ? Compare it with perfectly inelastic demand.
ANSWER: Inelastic demand is a situation where quantity demanded does not increase or decrease( i.e, quantity demanded would remain constant) with a fall or rise in its price. (people buy the same amount whether price drops or rises.)
When percentage change in quantity demanded is less than the percentage change in its price, then demand for such a commodity is said to be inelastic or less elastic. For example gasoline. whereas perfectly inelastic demand means when there is no change in demand with a change in price. For example Salt.