The demand for a good is price inelastic if

1. Analyze the question You're asked when demand for a good is price inelastic. This is about how responsive quantity demanded is to a change in price.

2. Explain the concept Price elasticity of demand (PED) is:

PED = % change in quantity demanded ÷ % change in price

We usually take the absolute value (ignore the negative sign), because demand curves slope downward. Then:

• PED > 1: elastic demand. Quantity changes by a bigger percentage than price. Examples are luxuries and goods with many substitutes.
• PED = 1: unitary elastic demand.
• PED < 1: inelastic demand. Quantity changes by a smaller percentage than price. Examples are necessities such as salt, drugs and petrol.
• PED = 0: perfectly inelastic.
• PED = ∞: perfectly elastic.

3. Solution Check each option:

• A. Less than one: This matches the definition. Price changes cause a proportionally smaller change in quantity demanded. ✔
• B. Equal to one: This is unitary elasticity, not inelastic.
• C. Negative: The sign is negative for almost all normal goods, whether demand is elastic or inelastic. It tells us nothing about inelasticity.
• D. Greater than one: This is elastic demand.

Example: If the price of garri rises by 10% and quantity demanded falls by only 4%, then PED = 4 ÷ 10 = 0.4. This is less than 1, so demand is inelastic.

4. Answer The correct option is A.

5. Exam tip Remember: "Inelastic = Insensitive." If buyers are insensitive to price, the elasticity value is below 1. Elastic means above 1. Also remember that if price and total revenue move in the same direction, demand is inelastic.