If a 1 Percent Decrease in Price Results in Less

question 120

Multiple Choice

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

• A)cross-price elastic.
• B)price inelastic.
• C)price elastic.
• D)status quo elastic.
• E)derived demand inelastic.

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Definitions:

Not Binding

A term used to describe a situation where a constraint or limit (such as a price ceiling or floor) does not affect the equilibrium outcome of the market.

Equilibrium Price

The market price where the quantity of goods supplied equals the quantity of goods demanded.

Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared and able to buy at a specific price.

Equilibrium Price

The price point at which the demand for a product matches the supply of the product, ensuring market stability.