Consider the demand curve illustrated in the figure to the right. Is demand elastic or inelastic? A. Demand is inelastic (at all prices). B. Demand is elastic (at all prices). C. Demand is inelastic at all prices above \( \$ 9.00 \) and elastic at all prices below \( \$ 9.00 \). D. Demand is elastic at all prices above \( \$ 9.00 \) and inelastic at all prices below \( \$ 9.00 \). E. Demand is elastic at all prices above \( \$ 11.00 \) and inelastic at all prices below \( \$ 11.00 \).

To determine whether the demand is elastic or inelastic based on price changes, we look at the responsiveness of quantity demanded when prices fluctuate. When the price is above $9.00, consumers are less sensitive to price changes, indicating inelasticity. Conversely, below $9.00, demand tends to be more sensitive, indicating elasticity. This lends credence to option C, where demand is inelastic at prices above $9.00 and elastic at prices below that threshold. Understanding demand elasticity can also be a powerful tool for businesses. When launching a new product or adjusting prices, knowing whether your customers will still buy after a price increase can mean the difference between profit and loss. It’s the secret sauce behind successful pricing strategies! Always remember: if consumers can easily substitute your product for another, you might just be in the elastic zone!