ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As a result, demand and supply often-but not always-tend to be relatively inelastic in the short run and relatively elastic in the long run.

Detailed explanation-2: -Relatively inelastic demand Example: A software company sells a service for $100 per year and has 50, 000 subscribers. The company raises the price of the subscription service to $130 per year, which is a 30% change. After the price increase, the company has 52, 000 subscribers, which is a 4% change.

Detailed explanation-3: -In the price elasticity table, goods and services with a relatively inelastic demand are things such as salt, medical care, tobacco products and petrol (fuel). They all have an elasticity coefficient of less than 1. What this means is that the quantity demanded is not highly sensitive to a change in the price.

Detailed explanation-4: -Supply is likely to be price inelastic in the short run because it may be difficult for coffee farmers to expand output and to increase their use of factors of production such as land and capital. In the short run at least one factor input is assumed to be fixed, for example the available stock of capital equipment.