The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-Which of the following is an example of inelastic demand?
A)A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk.
B)A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk.
C)A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk.
D)A 10 percent increase in the price of milk leads to a 10 percent increase in the quantity demanded of milk.
E)A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-Which of the following is an example of inelastic demand?
A)A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B)A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C)A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D)A 10 percent increase in the price of milk leads to a 10 percent increase in the quantity demanded of milk. 
E)A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Quizplus · Accepted Answer

Inelastic demand occurs when the percentage change in quantity demanded is less than the percentage change in price, indicating that consumers are not very responsive to price changes. Option C shows a 5 percent decrease in quantity demanded in response to a 10 percent price increase, exemplifying inelastic demand.

The Figure Given Below Shows the Demand Curves for Five