Price elasticity describes responsiveness rather than the total size of a market. A price change can have a large or small effect on quantity demanded depending on alternatives, the use case and the time available to adjust.
For AI services, cheaper inference may encourage more use or make additional tasks worthwhile. That possibility does not establish how much demand will grow, because adoption also depends on quality, integration costs and whether people value the resulting work.
ELI5
Demand elasticity asks how much people's use of something changes when its price or another relevant condition changes.
For example, cheaper transcription might lead a team to transcribe more meetings. Another team may keep the same number because it has no additional meetings worth transcribing.
Does a lower price always create a large increase in demand?
No. The response depends on the situation, available alternatives and whether additional use provides value.
Does elasticity describe total spending?
It describes how quantity responds to a change. Total spending also depends on the resulting price and quantity together.
