Question

If the demand for product x is inelastic, a 12 percent decrease in the price of x will

a) decrease the quantity of x demanded by more than 12 percent.
b) decrease the quantity of x demanded by less than 12 percent.
c) increase the quantity of x demanded by less than 12 percent.
d) increase the quantity of x demanded by more than 12 percent.

Answer 1

For a product with inelastic demand, a 12 percent decrease in price will result in less than a 12 percent increase in the quantity demanded.

Step-by-step explanation:

When demand for a product is inelastic, it means that the quantity demanded does not change significantly in response to price changes. If the price of product X decreases by 12%, and demand is inelastic, then the quantity demanded will increase by less than 12 percent. This is because inelastic demand indicates that consumers are not as sensitive to price changes; therefore, a price reduction does not lead to a proportionally larger increase in quantity demanded. The correct answer to the question is c) increase the quantity of x demanded by less than 12 percent.