Final answer:
For a product with inelastic demand, a 20 percent decrease in price results in less than a 20 percent increase in quantity demanded. The correct response is that the quantity of X demanded increases by less than 20 percent.
Step-by-step explanation:
If the demand for product X is inelastic, it means that the percentage change in quantity demanded is smaller than the percentage change in price. In other words, consumers are less responsive to changes in price for product X. Therefore, a 20 percent decrease in the price of X will result in an increase in the quantity of X demanded by less than 20 percent. The correct answer among the given options is C. Increase the quantity of X demanded by less than 20 percent.
Inelastic demand is typical for goods that are considered necessities or have few substitutes. In such cases, consumers are less likely to alter their purchasing behavior significantly in response to changes in price. Understanding the elasticity of demand is crucial for businesses to make informed pricing decisions and predict the impact on sales when adjusting prices for their products.