ACCA Certification Practice Test 2025 – All-in-One Guide to Secure Your Chartered Success!

Question: 1 / 990

What does a steep demand curve indicate in terms of elasticity?

High elasticity of demand

Inelastic demand

A steep demand curve signifies that a small change in price leads to a relatively small change in the quantity demanded. This characteristic directly correlates with inelastic demand, meaning that consumers are not very responsive to price changes. In such cases, even if prices increase or decrease, consumers will continue to purchase similar quantities.

This concept is essential in understanding market behavior, as consumers may have fewer substitutes available or may consider the product a necessity. As a result, the total revenue for sellers might increase as prices rise because the quantity demanded does not decrease significantly.

In contrast, a flatter demand curve would indicate high elasticity, where price changes result in large shifts in the quantity demanded, illustrating the opposite behavior. Therefore, recognizing the nature of the demand curve can assist businesses and economists in making informed pricing and production decisions based on consumer behavior.

Get further explanation with Examzify DeepDiveBeta

Perfectly elastic demand

High supply responsiveness

Next Question

Report this question

Download Association of Chartered Certified Accountants (ACCA) Certification Practice Test PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy