The short run price elasticity of demand for gasoline is 0.5,and the long run price elasticity of demand for gasoline is 1.1.Demand for gasoline is ________ in the short run and ________ in the long run.
A)elastic;inelastic
B)inelastic;elastic
C)elastic;unitarily elastic
D)inelastic;unitarily inelastic

Question

Quizplus · Accepted Answer

A price elasticity of demand of 0.5 in the short run indicates that demand is relatively inelastic, meaning that changes in price will result in proportionally smaller changes in quantity demanded. A price elasticity of demand of 1.1 in the long run indicates that demand is relatively elastic, meaning that changes in price will result in proportionally larger changes in quantity demanded. Therefore, the best answer is B, which states that demand is inelastic in the short run and elastic in the long run.

The Short Run Price Elasticity of Demand for Gasoline Is