When a 10 percent decrease in price results in a less than 10 percent increase in quantity sold, the demand for the product or service is described as
Blank
______.

Question

When a 10 percent decrease in price results in a less than 10 percent increase in quantity sold, the demand for the product or service is described as 
Blank
______.

BlackTom AI · Accepted Answer

The question asks us to identify the term for a demand response where a 10 percent drop in price leads to a rise in quantity demanded that is smaller than 10 percent. 
Option: commodity-like. This label is not a standard economic term for price elasticity of demand; it describes a general product characteristic rather than the responsiveness of quantity demanded to price changes. Hence it mis-specified the concept. 
Option: price sensitive. While this phrase conveys that consumers react to price, it is vaguer and not the formal term used in elasticity analysis. It could describe many situations but does not specify the proportionate response relative to price change. 
Option: inelastic. This is the correct characterization: when demand is inelastic, the percentage change in quantity demanded is smaller than the percentage change in price, so elasticity is less than 1. In this case, a 10% price decrease yields less than a 10% increase in quantity, consistent with inelastic demand. 
Option: elastic. Elastic demand would mean the quantity demanded responds more than proportionately to price changes, i.e., a 10% price decrease would produce a greater than 10% increase in quantity. That is not what the scenario describes, so this option is incorrect.

When a 10 percent decrease in price results in a less than 10 percent increase in quantity sold, the demand for the product or service is described as Blank ______.Single choice

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