Asked by Jackie Fortner on Jul 08, 2024
Verified
Price elasticity of demand is generally
A) greater in the long run than in the short run.
B) greater in the short run than in the long run.
C) the same in both the short run and the long run.
D) greater for "necessities" than it is for "luxuries."
Price Elasticity
The degree to which consumer demand for a product reacts to shifts in its price, showcasing the level of consumer sensitivity to pricing alterations.
Long Run
A period in which all inputs, including physical capital and labor, can be fully adjusted, allowing for analysis of equilibrium and efficiency without the constraints of fixed factors.
- Investigate the determinants affecting demand's price elasticity, encompassing timing, access to substitute products, and the percentage of income expended on an item.
- Distinguish the variations in demand elasticity through short-term and long-term lenses.
Verified Answer
M&
Michael & Angelica NoziskaJul 13, 2024
Final Answer :
A
Explanation :
Price elasticity of demand tends to be greater in the long run than in the short run because consumers have more time to adjust their behavior and find alternatives when prices change over a longer period.
Learning Objectives
- Investigate the determinants affecting demand's price elasticity, encompassing timing, access to substitute products, and the percentage of income expended on an item.
- Distinguish the variations in demand elasticity through short-term and long-term lenses.