Question

Due to shortages in raw materials, all firms in the micro-chip industry increased their prices to their customers. Yet demand for chips did not change. This suggests that the demand for micro-chips is _____________ under these conditions.

Answer 1

Answer:

Price Inelastic

Explanation:

Inelastic in the terms of the economic means or define as the static quantity of the goods and the services when the price of the product or service changes.

In short, it means that when the price increases, the buying habits of the consumer stay the same and the when the prices falls, the buying habits of the consumer remain unchanged.

So, in this case, the prices increases and the demand for the same did not change, which means that the demand for the micro chips is price inelastic.