Final answer:
When a product's price increase leads to a substantially larger decrease in quantity demanded, the demand for that product is referred to as elastic. This indicates a high sensitivity of consumers' purchasing behavior to price changes.
Step-by-step explanation:
If an increase in price for a product results in a significant decrease in quantity demanded (Qd) for that product, we say demand for the product is elastic. In elastic demand, consumers' purchasing behavior is highly sensitive to price changes. So if the product's price increases by a certain percentage, the quantity demanded will drop by an even greater percentage. For instance, a 5% increase in the price could result in a much larger, say 10%, decrease in the quantity demanded. This situation contrasts with inelastic demand, where price changes have a more muted effect on quantity demanded. It is important to remember that the price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the resulting figure is greater than one, the demand is considered elastic. In conclusion, when discussing a case where a price increase causes a relatively larger decrease in quantity demanded, the demand for that product is elastic.