Final answer:
The statement is false. Elastic demand implies a significant change in quantity demanded in response to price changes, and when demand is constant despite price changes, it indicates inelastic demand. Cases of elasticity include infinite elasticity, zero elasticity, and constant unitary elasticity.
Step-by-step explanation:
The statement is false. When demand for an item stays constant despite a change in the price of the item, this is an example of inelastic demand, not elastic demand. Elastic demand occurs when the quantity demanded changes by a greater percentage than the price change. There are different cases of elasticity to consider:
- Infinite elasticity or perfect elasticity is an extreme case where any change in price results in infinite changes in the quantity demanded or supplied, represented by a horizontal demand or supply curve.
- Zero elasticity is another extreme case where any price change, no matter how large, results in zero change in quantity, depicted by a vertical curve.
- Constant unitary elasticity occurs when a one percent change in price results in a one percent change in quantity.
Luxury goods, such as Caribbean cruises and sports vehicles, often have highly elastic demand curves, meaning consumers respond significantly to price changes. On the other hand, necessary items tend to have inelastic demand, as their consumption does not change much with price variations.