Demand is inelastic if elasticity is less than 1.

Demand is inelastic if elasticity is less than 1.

• A. Elasticity less than 1.
• B. A large change in quantity demanded results from a small change in price.
• C. Elasticity greater than 1.
• D. The quantity demanded is very responsive to changes in price.

Answer: (A)

Price elasticity of demand tells us how much quantity demanded responds to a price change. When the elasticity is less than 1 in absolute value, demand is inelastic: price changes cause only small changes in the quantity demanded. So the statement describing elasticity less than 1 matches inelastic demand. For example, if a price rises 20% and quantity demanded falls only 10%, the elasticity is 0.5, which is inelastic. The other descriptions point to more responsive demand: a large quantity change from a small price change, elasticity greater than 1, or being very responsive to price changes all indicate elastic demand.

Price elasticity of demand tells us how much quantity demanded responds to a price change. When the elasticity is less than 1 in absolute value, demand is inelastic: price changes cause only small changes in the quantity demanded. So the statement describing elasticity less than 1 matches inelastic demand.

For example, if a price rises 20% and quantity demanded falls only 10%, the elasticity is 0.5, which is inelastic. The other descriptions point to more responsive demand: a large quantity change from a small price change, elasticity greater than 1, or being very responsive to price changes all indicate elastic demand.