If consumers are not price sensitive in purchasing a consumer product such as Smucker's Jams, a 10% increase in the retail price of strawberry jam because of a 10% increase in the cost of strawberries from farmers will not affect quantities demanded for jam. Thus, the derived demand indicates that the demand for strawberries is:

Question

Quizplus · Accepted Answer

If consumers are not price sensitive, the demand for the final product (jam) is inelastic, meaning that changes in price do not significantly affect the quantity demanded. Consequently, the derived demand for strawberries, which are used to produce the jam, is also inelastic.

If Consumers Are Not Price Sensitive in Purchasing a Consumer