What term describes demand that changes considerably with price fluctuations?

The term that describes demand that changes considerably with price fluctuations is elastic demand. When demand is classified as elastic, it indicates that consumers are sensitive to price changes; a small change in price leads to a significant change in the quantity demanded. This relationship reflects a high responsiveness of consumers to price changes, which can occur in scenarios where substitutes are readily available or the good in question is considered a luxury rather than a necessity.

For example, if the price of a popular consumer gadget increases, many buyers might choose not to purchase it or switch to a cheaper alternative. Hence, the quantity demanded decreases sharply in response to the price increase. On the flip side, if the price decreases, consumers are likely to buy much more of that product due to its lower cost, showcasing the reactive nature of elastic demand.

This understanding is key in various economic analyses, including pricing strategies and market assessments.