An inelastic demand indicates that
A) quantity demanded does not vary with changes in the price.
B) relatively small changes in price lead to relatively large changes in quantity demanded.
C) relatively large changes in price are required to obtain a relatively small change in quantity demanded.
D) relatively large changes in quantity demanded lead to relatively large changes in price.

Question

Quizplus · Accepted Answer

Inelastic demand means that changes in price have a relatively small impact on the quantity demanded. This indicates that relatively large changes in price are required to obtain a relatively small change in quantity demanded. Option A is incorrect as it states that quantity demanded does not vary with changes in price which is the case for a perfectly inelastic demand, but not for an inelastic demand. Option B is incorrect as it describes a situation of elastic demand. Option D is incorrect as it describes a situation of perfectly elastic demand.

An Inelastic Demand Indicates That