What does the term “elastic” describe? the way consumers make substitutions demand whose elasticity is exactly equal to 1 demand that is very sensitive to a change in price demand that is not very sensitive to a change in price
The correct answer is demand that is very sensitive to a change in price
Elasticity is a term used to describe the sensitivity to a change in price on demand. It refers to the degree to which consumers change their demand when price changes.
A value that is less than 1 suggests that the demand is insensitive to price. Elasticity is an economic concept used to measure the change in the aggregate quantity demanded for a good or service in relation to price movements of that good or service.
