Final answer:
Elastic demand is when a percentage change in price results in a larger percentage change in quantity demanded, indicating consumers are very responsive to price changes.The correct answer is option A.
Step-by-step explanation:
If a given percentage change in price leads to a larger percentage change in quantity demand, this indicates a situation of elastic demand. Price elasticity of demand measures the responsiveness, or elasticity, of the quantity demanded of a product to a change in its price.
Elastic demand means that consumers are significantly responsive to price changes, and the percentage change in quantity demanded is greater than the percentage change in the price of the product.
For example, if a product's price increases by 5%, and the quantity demanded decreases by 10%, this indicates an elastic demand because the quantity response (10%) is larger than the price change (5%).
Conversely, inelastic demand would imply that the percentage change in quantity demanded is less than the percentage change in price, and unitary elasticity would be when the percentage changes are equal.The correct answer is option A.