Questions

If the percent change in quantity demanded is less than the percent change in price, economists label the demand for the good as inelastic.

A good that is inelastic does not have very stretchy demand. In economic terms, the quantity demanded does not change a lot when the price changes.

So, if the price of a good increases by 10 percent and the quantity demanded decreases by only 5 percent or less than 10, that good is said to have inelastic demand.

Hence, in this case, consumers are not considered very sensitive, or responsive, to a change in the price of that good.

The Maharashtra government banned the sale of 'High in Fat, Salt and Sugar' (HFSS) food in school canteens across the state. Furthermore, schools have been asked to replace the junk food items with healthy food such as whole grain, home-made rotis, parathas, rice, etc. The government will form a committee to conduct regular checks on schools.

Depending upon the increase or decrease in price rates, buyers may respond accordingly. Some buyers may assume that quality of the product may have reduced to to reduction in price or that the company may not be selling the product as per expectations. The other assumption that buyers may make is that prices may go down in the future and so may delay purchase. On the other hand increased price may lead to a decrease in demand as the product may be more costly for the consumers who may switch to another seller offering similar products at lower prices.

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