Which statement correctly describes elastic vs inelastic demand?

Which statement correctly describes elastic vs inelastic demand?

• A. Inelastic: independent of price; Elastic: changes with price
• B. Inelastic: price responds to demand; Elastic: demand unaffected
• C. Inelastic: only luxury goods are inelastic; Elastic: only necessities are elastic
• D. Inelastic: occurs only in the long run; Elastic: only in the short run

Answer: (A)

Elasticity of demand describes how much the quantity demanded responds to a change in price. If a price change leads to a large change in quantity, demand is elastic; if the quantity changes only a little, demand is inelastic. The statement that best fits this idea is that inelastic demand is largely independent of price, while elastic demand changes with price. The other options mix up causality (price responding to demand rather than demand responding to price), or wrongly tie elasticity to whether a good is a luxury or a necessity, or claim elasticity is confined to a specific time period.

Elasticity of demand describes how much the quantity demanded responds to a change in price. If a price change leads to a large change in quantity, demand is elastic; if the quantity changes only a little, demand is inelastic. The statement that best fits this idea is that inelastic demand is largely independent of price, while elastic demand changes with price. The other options mix up causality (price responding to demand rather than demand responding to price), or wrongly tie elasticity to whether a good is a luxury or a necessity, or claim elasticity is confined to a specific time period.