Final answer:
If a significant price increase leads to a small reduction in quantity demanded, the demand is considered relatively inelastic. This indicates that changes in price have little effect on the quantity demanded, often the case with necessities.
Step-by-step explanation:
If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of a good, demand is said to be relatively inelastic. Inelastic demand indicates that consumers are not highly responsive to price changes. This means even a significant increase in price will not greatly affect the quantity of the good that consumers are willing to purchase. An example of this could be a necessity good where consumers may continue to buy a similar amount despite price increases.
At one end of the demand curve, a high elasticity value, or elastic demand, would mean a large percentage change in quantity demanded over a small percentage change in price. Conversely, at the other end, the percentage change in quantity demanded is smaller and the percentage change in price is higher, resulting in a lower elasticity measure, or inelastic demand.