Final answer:
If E(p) is less than 1, then the demand is 2. inelastic, which means consumers respond less to price changes. Inelastic demand shows a lesser change in quantity purchased with a 1 percent increase in price.
Step-by-step explanation:
When we evaluate the responsiveness of consumers to price changes in a given market, we refer to this concept as the price elasticity of demand. The question asks about the case where E(p), the elasticity of demand, is less than 1. In this situation, if E(p) < 1, then the demand is considered to be inelastic.
In other words, inelastic demand occurs when a 1 percent increase in the price paid by consumers leads to a change in purchases that is less than 1 percent. This implies a low level of responsiveness among consumers to price changes. Hence, when the value of E(p) is less than 1, it means that the demand curve is relatively steep, indicating consumers are not greatly affected by price changes in terms of their purchasing quantity.
From Point D to Point E on a demand curve, if we observe that E(p) < 1, we are indicating that in this range, the demand is inelastic.