What indicates that demand is inelastic according to price elasticity?

Demand is considered inelastic when the percentage change in quantity demanded is less than the percentage change in price. This means that consumers do not significantly reduce the quantity they purchase in response to a price increase. Inelastic demand indicates that the good or service is a necessity or lacks sufficient substitutes, leading consumers to continue purchasing it even when the price rises.

When analyzing the relationship between quantity demanded and price, if a good has inelastic demand, the total revenue will move in the same direction as price changes. For example, if the price increases, total revenue will also increase, as the loss in quantity demanded is proportionally smaller than the gain from the higher price.

The other scenarios presented do not align with the characteristics of inelastic demand. If the percentage change in quantity equals the percentage change in price, we have unit elasticity. If the percentage change in quantity is greater than the percentage change in price, that signifies elastic demand, where consumers significantly react to price changes. Lastly, the phrasing of "meets price change" does not specifically define a measurable relationship, making it less clear in defining elasticity.

Thus, the correct understanding of inelastic demand is crucial for analyzing consumer behavior in response to price fluctuations.