Certified Supply Chain Professional (CSCP) Practice Exam

What does "low inelastic" refer to?

1. Price change significantly affects demand

2. Demand does not change with price change

3. Supply changes drastically with demand

4. High demand creates supply surplus

The correct answer is: Demand does not change with price change

The term "low inelastic" in economics refers to a situation where the quantity demanded for a good or service does not change significantly with a change in price. This means that consumers are relatively insensitive to price fluctuations; even if the price of the product increases or decreases, the demand remains consistent. In this context, the correct answer indicates that demand does not change with price change. This characteristic is typical for essential goods or basic necessities, where consumers will continue to buy regardless of price adjustments. Understanding this concept is crucial in supply chain management as it helps businesses forecast demand and adjust their inventory strategies accordingly, ensuring they meet customer needs without overstocking or understocking. The other options illustrate different economic scenarios that are distinct from the concept of low inelastic demand. For example, when price change significantly affects demand, it indicates a high elasticity of demand rather than low inelasticity. In asserting that supply changes drastically with demand, the focus shifts to supply dynamics rather than the price-demand relationship. Lastly, a situation where high demand creates a supply surplus also diverges from the definition of inelastic demand, as it implies an imbalance between supply and demand rather than the stability of demand in response to pricing.