Definition: When an economist (and no one else really uses this word) says that demand is inelastic, he or she means that the demand for product or service doesn't change quickly even if the price goes up or down. A good example of this is gas prices. These prices can change every day. If there is a shortage, the prices will skyrocket. People will still buy gas, because they can't change their driving habits very quickly. To shorten your commute time, you'd need to change jobs, which takes awhile. You've got to get groceries at least weekly. You might go to a store that's closer, but you'll put up with slightly higher prices before you change your habits.
Elastic demand is the opposite. A good example of this is housing. True, people need to live somewhere, but they have many choices: townhome, condo, apartment or live with friends. Demand for housing in 2006 was artificially stimulated by investors who bought the homes only to flip them. When the housing market turned, many people lost their homes, and some had to move back in with relatives. As a result, the average national home price fell 28%, more than in the Great Depression.
Clothing also has elastic demand. True, people have to wear clothes, but there are many choices of what kind of clothing, and how much to spend. During the Great Recession, second-hand stores did a great business, as people shopped for inexpensive clothing.
