A local bakery notices that when they increase the price of bread, the quantity sold decreases significantly. How should this scenario be classified in terms of elasticity, and what does it imply about consumer behavior?

This scenario can be classified as an example of elastic demand. When the bakery raises the price of bread and the quantity sold decreases significantly, it means that consumers are sensitive to price changes. If people buy much less bread when the price goes up, it shows that they can easily choose not to buy it or find alternatives. For instance, if a loaf of bread goes from $2 to $3 and sales drop sharply, it indicates that many customers are unwilling to pay the higher price. This behavior suggests that consumers prioritize their budget and will adjust their purchases based on price changes.