What characterizes inelastic demand?

Inelastic demand is characterized by a situation where the quantity demanded of a good or service does not significantly change in response to price changes. This means that consumers are not very sensitive to price fluctuations for that particular item.

The essence of inelastic demand lies in its price elasticity, which is defined as the percentage change in quantity demanded divided by the percentage change in price. In the case of inelastic demand, the absolute value of this elasticity is less than 1. Thus, even if the price increases or decreases, the change in the quantity demanded remains relatively small.

Consequently, while the response to price changes is minimal, it does not inherently depend on a small quantity being demanded. A product can be inelastic regardless of how much of it is consumed, as long as consumers continue to buy roughly the same amount even when prices change. Items that typically exhibit inelastic demand include necessities like insulin or basic food items, where consumers need to purchase them irrespective of price changes.

Therefore, although a small quantity demanded could lead to a perception of inelasticity, it's not the defining characteristic of inelastic demand. The defining feature is the lack of responsiveness to price changes, where the elasticity remains below 1.