What is the difference between the terms elastic and inelastic and how do they relate to demand?

Price Elasticity of demand relates to how responsive consumers are in response to a change in the price of any given good or service. You can calculate price elasticity through the formula: Price elasticity = % Change in quantity demanded/% Change in price (remember 'change' is often denoted as a triangle symbol). If the result of the formula is greater than 1 that tells us that the good or service is elastic, meaning that customers are very responsive to changes in price. For example, budget coca cola is very elastic because there are many substitutes in a very competitive market that produces a relatively homogenous product; if price rises customers will simply switch to another option and demand will plummet quickly. The converse for this example is also true.Per contra, if the result of the formula (Price elasticity = % Change in quantity demanded/% Change in price) is less than 1 then it can be said that the good or service is is inelastic and consumer demand is not very responsive to changes in price. Good examples of highly inelastic goods and services are those that pertain to the lower rungs of Maslow's Hierarchy of Needs and essential products such as housing and healthcare. These do not experience large fluctuations in demand because they are a cornerstone of existence and cannot be forgone for the sake of saving some money.