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Elasticity refers to the percent change in quantity with respect to the percent change in price. Elastic means that the percent change in quantity is greater than the percent change in price. Inelastic means that the percent change in quantity is less than the percent change in price. Unit-elastic means that the percent change in quantity is equal to the percent change in price. Why is the demand curve inelastic for essential items like food and clothing?

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    $\begingroup$ Hi @Arunabh: choice/substitution is not an option when it comes to essential foods. More a survival necessity. That's really the core reason why demand for essential foods is inelastic. Yet, food in general is not. There are many different food categories and substitution possibilities within these categories subject to a budget constraint. $\endgroup$
    – EB3112
    Commented May 16, 2023 at 8:08

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Essential/necessity goods are goods people have hard time living without. If you consider food as a composite good as opposed to individual items the demand for food would be inealstic because as a composite good it has no substitutes (there is no non-food nourishment for humans) and without food you would die. When it comes individual goods, rather than composite goods an insulin would be better example.

Because these goods have little substitutes and are highly desired people will be willing to buy similar quantities of these even if price increases disproportionally. This by definition means they will be inelastic goods since as you pointed out in your question, demand is defined to be inelastic when the the % drop in quantity is smaller than % increase in price and vice versa.

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