Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The good has inelastic demand
B
The good has elastic demand
C
The good is a luxury item
D
The good has unitary elasticity
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a good goes up and people buy much less of it, this shows that the demand for that good is elastic. Elastic demand means that consumers are sensitive to price changes; a small increase in price leads to a large drop in the amount they buy. For example, if the price of a popular snack rises from $1 to $2 and people buy half as many, this indicates that they might find alternatives or decide not to buy it at all. This behavior suggests that they have choices and can easily adjust their buying habits based on price. Therefore, when demand is elastic, it highlights how important price is to consumers when making purchasing decisions.
Detailed Explanation
When the price goes up and people buy much less, it shows they are sensitive to price changes. Other options are incorrect because Some might think inelastic means people always buy the same amount; A luxury item might seem like it has elastic demand, but not all luxury items are elastic.
Key Concepts
Price elasticity of demand
Topic
Elasticity of Demand and Taxation
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.