Final answer:
When building a demand curve, the assumption made is either that demand is elastic or inelastic.
Step-by-step explanation:
In order to build a demand curve for your exercise-bike company, you would need to make an assumption about the elasticity of demand. Elasticity refers to the responsiveness of quantity demanded to changes in price. In this case, the assumption would be that the demand is either elastic, meaning that quantity demanded changes significantly in response to price changes, or inelastic, meaning that quantity demanded changes minimally in response to price changes.
For example, if the demand for your exercise bikes is elastic, a decrease in price could lead to a significant increase in quantity demanded as more customers are willing to purchase the bikes at the lower price. On the other hand, if the demand is inelastic, a decrease in price may have little impact on quantity demanded as customers are less sensitive to price changes.
Therefore, the correct answer to your question would be either a) Demand is elastic or b) Demand is inelastic, depending on the assumption you made while building the demand curve for your exercise-bike company.