If a fall in price leads to a large increase in quantity demanded, demand is described as

• A. Price inelastic demand
• B. Price elastic demand
• C. Income elastic demand
• D. Consumer durables

Answer: (B)

The main idea is price elasticity of demand—the measure of how responsive buyers are to price changes. If a fall in price leads to a large rise in quantity demanded, that means demand is price elastic. In elastic demand, the percentage change in quantity demanded is bigger than the percentage change in price (elasticity greater than 1). This shows buyers respond strongly to price cuts, often because there are good substitutes, the item isn’t essential, or it represents a noticeable portion of income.

The other terms aren’t describing this responsiveness to price: price inelastic demand would mean quantity changes little when price changes; income elastic demand relates to how demand shifts with income, not price; and consumer durables is a type of good, not a measure of how sensitive demand is to price.