Identify an example of a product whose demand was once inelastic but is now elastic.

In order to answer this question, we should look at the factors that cause demand for a good or service to be elastic or inelastic.  We should then try to think of a product for which these factors have changed over time.

Although different scholars and textbooks use different lists of factors that affect elasticity, I would argue that there are three factors that we should look at here.  These are:

1. Is the good a necessity or can you do without it? If it is a necessity, demand will be inelastic.


2. Are there substitutes that you can buy instead of that good?  If there are no substitutes, demand will be inelastic.


3. What proportion of your income does it take to buy it?  If a good or service costs a small proportion of your income, demand will be inelastic.

What we must do, then, is to look for goods that were once necessities but are not now, goods for which there are now substitutes but for which there previously were no substitutes, and/or goods that were once cheap but are now expensive.  We will be able to find examples of each of the first two of these.

It is not hard to come up with an example of a good that was once a necessity but which is now more of a luxury.  All we have to do is to think of things that have been supplanted by new technologies.  One good example of this would be horses and all things related to keeping horses (stables, harnesses, horseshoes, etc.).  Horses were once a necessity for a large proportion of the population.  Now, horses are simply a recreational “item” for almost everyone.  Therefore demand for horses and their accoutrements is much more elastic today than it once was.

It is also quite easy to think of goods or services for which there were previously no substitutes.  Perhaps the most obvious of these is telephone landlines.  Not long ago, the telephone hooked up to the wall was the only way to communicate with people by voice if they were not near to you.  There was no substitute good that could perform the same function.  Now, there are cell phones that serve as more or less perfect substitutes for landlines.  Therefore, the demand for landlines is much more elastic than it once was.

These are two examples of products whose demand is much more elastic than it once was.  If you need more examples, think of other things that were once indispensable but which can now be substituted or which are now completely unnecessary.