Explanation

Defensive companies are those whose products/services have:

• Inelastic demand - consumers continue buying regardless of economic conditions
• Essential nature - basic necessities that people cannot easily eliminate
• Stable revenues during economic downturns

Analysis of options:

• A. Toothpaste producers - Defensive

  • Essential hygiene product
  • Inelastic demand
  • Consumers continue purchasing during recessions

• B. Airline travel companies - Cyclical

  • Discretionary spending
  • Highly sensitive to economic conditions
  • First to be cut during downturns

• C. Discretionary consumer goods producers - Cyclical

  • Non-essential purchases
  • Highly sensitive to economic conditions
  • Demand decreases during recessions

Therefore, toothpaste producers are the most defensive as they provide essential products with stable demand throughout the business cycle.