Question

Recently, much of the Western United States experienced drought conditions and water usage was restricted in Denver. Yet, even though most people used less water, the price of water did not drop. When the drought was declared over, the water company raised water prices. However, the residents of Denver did not use less water. Here, water is1.price insensitive.2.price elastic.3.price inelastic.4.price sensitive.5.unitary elastic.

Answer 1

Answer: Price inelastic

Explanation:

The residents of Denver behave in a price inelastic manner to changes in price of water as observed in the question.

A price inelastic demand behavior is one in which changes in price of a commodity does not in any way influence the demand behavior of buyers in a market.