Asked by Kelsee Katsanes on Jul 27, 2024
Verified
Related to the Economics in Practice on page 102: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?
A) When demand is elastic, price increases reduce revenue because a small price increase will lead to a large decrease in quantity demanded.
B) In the long run, consumers have greater access to substitutes.
C) Consumers tend to postpone making purchasing decisions as long as possible.
D) In the short run, prices can change rapidly, but in the long run they are more stable.
Elastic Demand
A demand relationship in which the percentage change in quantity demanded is larger than the percentage change in price in absolute value (a demand elasticity with an absolute value greater than 1).
Long Run
The period in which all factors of production and costs can be fully adjusted, allowing for all inputs and operations to change.
Substitutes
Goods that can serve as replacements for one another; when the price of one increases, demand for the other increases.
- Understand why demand is more elastic in the long run compared to the short run.
- Recognize how the availability of substitutes affects the elasticity of demand.
Verified Answer
JS
Jacob SpenceJul 31, 2024
Final Answer :
B
Explanation :
In the long run, consumers have more time to adjust their behavior and find substitutes for a product if its price increases, making demand more elastic.
Learning Objectives
- Understand why demand is more elastic in the long run compared to the short run.
- Recognize how the availability of substitutes affects the elasticity of demand.