Question

Inelastic demand refers to a situation in which

Multiple Choice
the price sensitivity of consumers is very high.
factors such as income and purchasing power are constant.
a specific change in price causes only a small change in the amount purchased.
factors such as income and purchasing power do not influence demand.
demand changes significantly due to a small change in price.

Answer 1

Inelastic demand refers to a situation where a change in price results in a smaller percentage change in quantity purchased, indicating consumers' low responsiveness to price changes. The correct answer is option c.

Step-by-step explanation:

In economic terms, inelastic demand is when the elasticity of demand is less than one. This implies that a 1 percent increase in the price that consumers pay will result in a less than 1 percent change in the quantity purchased. Therefore, there is a low responsiveness of consumers to changes in price. This contrasts with elastic demand where the quantity demanded is highly sensitive to changes in price.

For the multiple-choice question provided, the correct answer is that inelastic demand refers to a situation in which:

• a specific change in price causes only a small change in the amount purchased.