Trivia: How much a consumer reacts to a price change is known as what?
Margin price
Elasticity
Scarcity
Equilibrium
The correct answer is Elasticity
So why is this answer correct? : The elasticity of a product determines how much price changes affect demand. Some goods and services, such as insulin, are inelastic because a consumer will buy them at any price. However, other things can be highly elastic, such as massages or going to the movies — things that can be easily foregone if the price rises too high. High inelasticity can lead to price gouging, which is when sellers take advantage of the demand for essential goods and unnecessarily hike up prices.