The term inelastic demand means that the demand for a product is not sensitive to price changes.
Elastic demand is a major concern for a manufacturer that attempts to set product prices based on costs. For instance, if the manufacturer's production and sales have declined and it fails to cut fixed costs, the manufacturer could be worse off by increasing selling prices.
Use the search box on AccountingCoach.com for our Q&A on death spiral which is pertinent to elastic demand.
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