Demand is price inelastic if:
A) the price of the good responds slightly to a quantity change.
B) the demand curve shifts very little when a demand shifter changes.
C) the percentage change in quantity demanded is relatively small in response to a relatively large percentage change in price.
D) all of the above are true.

Question

Quizplus · Accepted Answer

Price elasticity of demand is the degree of responsiveness of quantity demanded to a change in price. When demand is price inelastic, a change in price causes a relatively smaller change in the quantity demanded. This means that the percentage change in quantity demanded is relatively small in response to a relatively large percentage change in price. Therefore, option C is the best choice. Option A is incorrect because price elasticity is not about how much the price responds to a quantity change. Option B is incorrect because it refers to demand shifter, which is not directly related to price elasticity of demand. Option D is incorrect because option A and B are incorrect, and option C is the only correct explanation.

Demand Is Price Inelastic If