In economics, what does it mean when a good is described as inelastic?

When a good is described as inelastic, it means that the quantity demanded for that good does not change significantly in response to price changes. Consumers tend to continue purchasing similar amounts of an inelastic good even when its price increases or decreases. This characteristic is often seen in essential goods or necessities, such as medications or basic food items, where consumers will buy them regardless of price fluctuations because there are few, if any, alternatives available or because the good is crucial to their daily lives.

This concept is important in understanding consumer behavior and how it affects market dynamics. Inelastic demand indicates a lack of responsiveness to price changes, which can affect how businesses price their products and how governments approach taxation on certain goods. Understanding this principle helps economists predict the impact of price changes on revenue and overall market sustainability.