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 demand for jam. Thus,the derived demand indicates that the demand for strawberries is:

Question

Quizplus · Accepted Answer

The fact that consumers are not price sensitive in purchasing Smucker's Jams means that a 10% increase in price will not significantly impact demand for the product. As a result, the demand for strawberries - the key ingredient in the product - is likely to be inelastic, meaning that changes in the price of strawberries will not substantially affect demand for the product.

If Consumers Are Not Price Sensitive in Purchasing a Consumer