Which of the following best describes a price-sensitive market?

• A. the description "consumers are unwilling to pay more than the lowest price possible for the style of wine they want to buy"
• B. consumers are willing to pay premium for top brands
• C. prices do not influence demand
• D. advertising determines demand completely

Answer: (A)

Price sensitivity is about how strongly demand responds to price changes. In a price-sensitive market, buyers actively compare prices and will switch to cheaper options or different styles if the price goes up, showing little loyalty to a single price. The statement that consumers are unwilling to pay more than the lowest price possible for the style of wine they want to buy captures this behavior: demand moves with price, and buyers seek the best deal among comparable wines. By contrast, paying a premium for top brands reflects brand value and less price responsiveness, not price sensitivity. Saying prices do not influence demand contradicts the idea of price-driven choice, and claiming advertising alone determines demand ignores the important role of price.