Final answer:
Price elasticity is the term that describes how responsive consumer demand is to changes in price. It can be elastic, where a small price change causes a large change in demand, or inelastic, where demand is not significantly affected by price changes.
Step-by-step explanation:
The term that represents the levels of responsiveness consumers have to fluctuations in costs for certain products and the effect those changes have on demands for those products is price elasticity. Price elasticity measures how the quantity demanded of a good responds to a change in the price of that good. When the demand is inelastic, a 1 percent increase in price leads to less than a 1 percent change in the quantity demanded, indicating a low responsiveness by consumers to price changes. On the other hand, elastic demand is when the demand is highly responsive to changes in price, such that a small change in price leads to a larger change in quantity demanded.
This concept is critical in understanding how consumers will react to price changes, whether the product is a luxury or a necessity. For luxury items, a decrease in price may significantly increase demand, while necessities may see little change in demand with a change in price.