What term describes a situation where a change in the price of a product results in a change in demand?

The term that describes a situation where a change in the price of a product results in a change in demand is known as elastic demand. Elastic demand occurs when consumers are highly responsive to price changes. If a product has elastic demand, a small decrease in price can lead to a significant increase in the quantity demanded, while a small increase in price can lead to a substantial decrease in the quantity demanded. This characteristic is often influenced by factors such as the availability of substitutes, the necessity of the product, and the proportion of a consumer’s budget that the product represents.

In contrast, inelastic demand indicates that consumers are not very responsive to price changes; price increases or decreases result in relatively small changes in the quantity demanded. The other options provided do not pertain to the direct relationship between price changes and demand: perfect competition refers to a market structure characterized by many buyers and sellers with no single entity controlling price, while a monopoly refers to a market structure where a single seller dominates the market. Thus, the focus of the question centers specifically on how demand reacts to price changes, making elastic demand the appropriate term.