Final answer:
The demand for vegetables with a price elasticity of -0.05 is inelastic, meaning changes in price have a small effect on the quantity demanded because the absolute value of elasticity is less than one.
Option 'b' is the correct.
Step-by-step explanation:
If the price elasticity of demand for vegetables is -.05, this indicates that the demand is inelastic. Price elasticity measures how much the quantity demanded of a good responds to a change in the price of that good.
A negative value is typical since price and quantity demanded usually move in opposite directions.
However, it is the absolute value of the elasticity that matters. In this case, with an elasticity of -.05, the absolute value is 0.05, which is less than one. According to economic principles, when elasticity is less than one, the demand is considered inelastic, meaning that changes in price have a relatively small effect on the quantity demanded.
Therefore, we can answer that B) The demand is inelastic.
This indicates that if the price of vegetables were to increase or decrease, the amount of vegetables that consumers would buy would change only slightly. It's important to highlight that elasticities less than one signify inelastic demand, as opposed to elastic demand, where elasticity is greater than one, and unitary elastic demand, where the elasticity is exactly one.