What does elastic demand imply about consumer behavior?

Elastic demand indicates that consumers react significantly to price changes. When the price of a good or service increases, we would expect the quantity demanded to decrease substantially, and vice versa. This sensitivity is so pronounced that even a small change in price can lead to a relatively large change in the quantity demanded.

For example, if the price of a luxury good rises, consumers may choose to forego that purchase or look for substitutes, illustrating their responsiveness to price fluctuations. This concept is fundamental in understanding market dynamics and consumer choices, as it affects how businesses set prices and strategize around supply and demand.

In contrast, the other options describe scenarios of inelastic demand or a lack of responsiveness to prices, which do not apply when discussing elastic demand. Therefore, recognizing that elastic demand reflects a high sensitivity to price changes helps in grasping broader economic principles related to consumer behavior.