A change in price results in a proportionately smaller change in demand

• A. Price elastic demand
• B. Price inelastic demand
• C. Income elasticity of demand
• D. Price elasticity of demand

Answer: (B)

Price inelastic demand describes a situation where quantity demanded changes by a smaller percentage than the price. When the price moves, the percentage change in the amount buyers want to purchase is less than the percentage change in price, so the elasticity value is less than 1 in absolute terms. This means consumers are relatively unresponsive to price changes, often because the good is a necessity, has few substitutes, or there isn’t enough time to adjust behavior. So the statement that a price change leads to a proportionately smaller change in demand fits this concept exactly.

The other ideas aren’t the focus here: a price elastic scenario would mean demand changes by a larger percentage than the price, and income elasticity of demand concerns how demand responds to changes in income, not price. Price elasticity of demand is the general measure itself, not the specific behavior described.