Multiple choice

What is the quality of the demand if the increase in the price of a product causes a decline in its demand?

  1. Elastic

  2. Inelastic

  3. rigid

  4. Constant
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A Correct answer
Explanation

Elastic demand means that consumers are highly responsive to price changes. When price increases cause a significant decline in quantity demanded, the demand is considered elastic. This indicates that consumers have substitutes available or are sensitive to price changes. Inelastic demand would show little change in demand despite price increases.

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