What is the impact of a small change in price on demand in this context?

Understand the Problem

The question is asking about the relationship between price changes and demand, specifically how a small change in price affects demand within a given context. The answers provided suggest different perspectives on this relationship.

More Information

When demand is inelastic, consumers are less sensitive to changes in price, usually because the good is a necessity or lacks substitutes. This results in small changes in quantity demanded, even when prices fluctuate.

Tips

A common mistake is confusing inelastic demand with demand that does not change at all. Inelastic demand changes, but at a lower rate than the price change.

Sources

• The Price Elasticity of Demand – Microeconomics for Managers - uw.pressbooks.pub
• Elasticity of Demand | Ag Decision Maker - extension.iastate.edu
• Price Elasticity - Prisync - prisync.com