Which of the following best defines the term 'inelastic demand'?

Inelastic demand refers to a situation where the quantity demanded of a good or service remains relatively constant even when there are changes in its price. This is characteristic of essential goods, such as basic food items or medications, where consumers will continue to purchase similar amounts regardless of price fluctuations.

When demand is classified as inelastic, it indicates that consumers are less sensitive to price changes, suggesting that their need or desire for the product is strong enough that they will not significantly reduce their purchases even if prices increase. This concept is foundational in economics, as it helps businesses and policymakers understand consumer behavior and market dynamics.

The other options reflect different demand scenarios that do not align with the definition of inelastic demand. For instance, the idea that demand increases with price changes represents elastic demand, where consumers are responsive to price increases. Demand that decreases rapidly when prices rise implies a significant sensitivity to price changes, indicating a highly elastic demand. Lastly, associating inelastic demand solely with luxury items is misleading, as inelastic demand typically applies to necessities rather than luxuries.