ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Higher, because there may be psychological impediments to reacting to a change in the short term
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Lower, because non-durable goods are more necessary in the long-term than they are in the short-term
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Higher, because non-durable goods are more necessary in the short-term than in the long-term
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Lower, because consumers are more likely to switch to other substitutes over the long term
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Detailed explanation-1: -Elasticities are often lower in the short run than in the long run.
Detailed explanation-2: -Supply is normally more elastic in the long run than in the short run for produced goods, since it is generally assumed that in the long run all factors of production can be utilized to increase supply, whereas in the short run only labor can be increased, and even then, Page 2 changes may be prohibitively costly.
Detailed explanation-3: -Demand tends to be more price inelastic in the short-run as consumers don’t have time to find alternatives. In the long-run, consumers become more aware of alternatives. Price elasticity of demand measures the responsiveness of demand to a change in price.
Detailed explanation-4: -The price-elasticity of demand for durable goods in the short-run differs from than in the long-run because the demand of durable goods is inelastic in short-run as these goods last for a long period and demand for durable goods are comparatively elastic in the long run.
Detailed explanation-5: -Answer and Explanation: The price elasticity of demand for electricity is lower in the short-run and larger in the long run.