What characterizes elastic demand?

Elastic demand is characterized by a significant change in the quantity demanded in response to changes in price. When the price of a good or service decreases, consumers are likely to purchase much more of it, and conversely, if the price increases, the quantity they buy tends to drop substantially. This responsiveness indicates that consumers are sensitive to price changes, which is a crucial feature of goods with elastic demand.

For example, if the price of a luxury item decreases, many consumers may decide to buy it, as it becomes more affordable, demonstrating the concept of elasticity in their purchasing behavior. Additionally, this characteristic plays a vital role in pricing strategies and revenue generation for businesses.

In contrast, the other options reflect different concepts: constant demand despite price changes suggests inelastic demand, slight increases for price decreases indicate a less responsive (or elastic) behavior, and independence from income levels does not pertain to demand elasticity but rather refers to other economic factors like normal and inferior goods.