Demand for fungible goods is elastic. Demand for nonfungible goods is inelastic.

Fungible goods are goods that are interchangeable; if you have one, you have them all. Nonfungible goods have unique characteristics that make them identifiably distinct from other goods of the same type. <br><br><br>Fungible goods are more demand elastic than nonfungible goods because the instant an inelastic demand shock is placed on fungible goods, the market mechanism opens up alternatives. If it happens in a nonfungible good, your choices are limited by the market and the market can't open up alternatives for nonfungible goods. <br><br><br>For instance, a wheat price shock could cause a shock in corn, rice, and barley. All grains are fungible, so the market can more easily substitute one grain for another when the price of grains gets high. When the price of grains gets high, the market opens up flour substitutes-- potatoes, nuts, seeds, etc,-- and opens up meat substitutes. All food is fungible. You can more easily substitute one good for another when there's a price shock in fungible goods. <br><br><br>If the price of milk goes up, the market opens up alternative dairy sources--lactose free milk, almond milk, soy milk, oat milk, etc. If the price of milk goes up and the price of almond milk goes up, the market opens up alternative nuts and seeds-- soy milk, oat milk, cashew milk, hazelnut milk, etc. If the price of nuts goes up, the market opens up alternative snacks--dried fruit, granola, bread, crackers, etc. <br><br><br>On the other hand, if the price of the Mona Lisa goes up, your alternatives are limited. You can't substitute it with any other painting. If you want to collect the most expensive painting in the world, there is only one painting you can buy. <br><br>If the price of real estate goes up, there are no substitutes other than rent. Real estate is an asset that cannot be reproduced. <br><br><br>If the price of healthcare goes up, there are no good substitutes. There are poor substitutes, like going to Mexico for cheap surgery or taking herbs for your ailments, but the alternatives are poor because they're often accompanied by greater risk. <br><br><br>If the price of college tuition goes up, there are some alternatives, like vocational school or trade school or online college, but they're not good alternatives because they're not as valuable.