What term refers to the situation when the demand for certain goods changes significantly with minimal price alteration?

The term that describes a situation where the demand for certain goods changes significantly with minimal price alteration is referred to as price insensitivity. This concept is indicative of a demand curve that is relatively steep, suggesting that consumers are not very responsive to changes in price. In such scenarios, even a small increase or decrease in price does not greatly affect the quantity demanded by consumers.

Price insensitivity often occurs with essential goods or those with fewer substitutes—consumers may continue to buy these products regardless of price changes because they perceive them as necessary for their daily lives. This can lead to a stable demand even in fluctuating economic conditions.

Understanding this concept is crucial for businesses and economists, as it helps to gauge how price adjustments might influence sales and revenue. Companies may strategically use this knowledge to maintain pricing strategies for essential goods, knowing that demand will remain relatively constant even with price changes.