During World War II, the price of rubber went up considerably. The rise in price stimulated research for alternatives. Today's automobile tires are made almost entirely from synthetic materials. As a result, the increase in the price of rubber eventually led to a very large drop in quantity demanded. This is an example of how the price elasticity of demand:
A) falls the less specifically the good is defined.
B) rises the less specifically the good is defined.
C) falls the greater the time frame considered.
D) rises the greater the time frame considered.

Question

Quizplus · Accepted Answer

Over time, consumers and producers can find substitutes or alternatives, making demand more elastic. The long-term response to the price increase in rubber led to the development of synthetic alternatives, reducing the quantity demanded for natural rubber.

During World War II, the Price of Rubber Went Up