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; unit elastic
D) inelastic; unit inelastic

Question

Quizplus · Accepted Answer

A price elasticity of demand less than 1 indicates inelasticity, while a price elasticity of demand greater than 1 indicates elasticity. Therefore, with a short run price elasticity of demand for gasoline of 0.5, demand is inelastic in the short run. Similarly, with a long run price elasticity of demand for gasoline of 1.1, demand is more elastic in the long run. Choice B is the only option that correctly identifies the change in elasticity from inelastic in the short run to elastic in the long run.

The Short Run Price Elasticity of Demand for Gasoline Is