Certified Supply Chain Professional (CSCP) Practice Exam

In economic terms, what does "high elastic" mean?

1. Demand is unresponsive to price change

2. Price change has little effect on supply

3. Demand changes significantly with price change

4. Supply remains constant regardless of demand

The correct answer is: Demand changes significantly with price change

In economic terms, "high elastic" refers to a situation where demand changes significantly in response to a change in price. This means that when the price of a good or service increases or decreases, consumers may drastically alter their purchasing behavior. For example, if the price of a product increases and the demand for that product decreases substantially, it indicates that the demand is highly elastic. This characteristic demonstrates a strong relationship between price fluctuations and consumer behavior, allowing businesses to strategize pricing and inventory based on how sensitive their customers are to price changes. In contrast, the other options reflect different concepts related to elasticity. The first option deals with inelastic demand, where consumers are less responsive to price changes. The second option refers to the concept of supply elasticity rather than demand, and the last option suggests a scenario where supply is entirely inelastic, remaining constant despite changes in demand. These distinctions highlight the essential nature of elasticity in understanding consumer behavior in relation to price changes.