456 AGRICULTURAL ECONOMICS 



items taken together make a heavy increase in the cost of feeding, 

 with the result that many feeders have either curtailed their feeding 

 operations greatly or else have stopped feeding entirely. 



D. The Nature and Influence of Demand 



144. THE NATURE OF DEMAND FOR AGRICULTURAL 

 PRODUCTS 1 



BY JOHN G. THOMPSON 



Economists have long recognized that the nature of demand varies 

 greatly with reference to different classes of commodities. One such 

 distinction made is that between elastic and inelastic demand. 

 Demand for a good is said to be elastic when that good is of such a 

 nature that the demand is sensitive to price change or to a change in 

 the purchasing power of the prospective buyer. If the price tends 

 to fall, demand is immediately responsive and tends to increase. If, 

 on the other hand, the price tends to rise, demand, again immediately 

 responsive, tends to decrease. Where the demand for a good is 

 inelastic, however, there is a lack of sensitiveness to price change and 

 the demand will be influenced little or not at all. 



Other things being equal, elasticity of demand is said to make for 

 stability of price and inelasticity of demand for instability of price. 

 Under normal conditions, as the price of a good characterized by 

 elastic demand tends to rise, demand, being immediately responsive, 

 tends to decline, thus checking the rise in price. If the price of a 

 good of the same kind falls, under normal conditions demand imme- 

 diately broadens and tends to check the decline in price. With a 

 good characterized by inelastic demand, there is little or no check to 

 such rise or fall in price. 



Economists have further pointed out that elasticity of demand 

 characterizes, in the main, those goods which we recognize as comforts 

 and luxuries, while inelastic demand characterizes those classes of 

 goods that we regard as necessities. A certain rather well-defined 

 amount of the latter class of goods we want intensely, but once having 

 secured this minimum of necessities, we become extremely indifferent 

 about an additional supply. 



1 Adapted from "The Nature of Demand for Agricultural Products and Some 

 Important Consequences," Journal of Political Economy, XXIV (February, 1916), 

 158-82 



