DECA+ Business Management and Administration Practice Exam

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Boost your business management skills with the DECA+ Business Management and Administration Exam. Practice with interactive questions, hints, and detailed explanations. Ace your exam today!

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How is inelastic demand described?

  1. Demand that fluctuates significantly with price changes

  2. Demand that remains unchanged despite price variations

  3. Demand that increases with rising incomes

  4. Demand that is sensitive to consumer trends

The correct answer is: Demand that remains unchanged despite price variations

Inelastic demand is characterized by the responsiveness of quantity demanded not changing significantly in response to price changes. When the price of a product or service increases, the quantity demanded remains relatively stable, and similarly, if the price decreases, the quantity demanded does not increase significantly. This phenomenon typically occurs with essential goods or services, such as food, medicine, or utilities, where consumers will continue to purchase relatively the same amount regardless of price fluctuations because their need is not influenced by price. The other options describe different types of demand: fluctuating demand with price changes indicates elastic demand, which reacts significantly to price changes; demand that increases with rising incomes points towards luxury goods or normal goods that are income elastic; and sensitivity to consumer trends refers to demand that reacts to changes in consumer preferences, which can vary widely with different products. Thus, option B accurately captures the essence of inelastic demand, highlighting its stability in the face of price variations.