Which of the following statements best describes the relationship between short-run demand elasticity and long-run demand elasticity?
A)For many products, long-run demand is likely to be more price elastic than short-run demand.
B)For durable goods, long-run demand is likely to be more price elastic than short-run demand.
C)For many products, long-run demand is likely to be more price inelastic than short-run demand.
D)For most products, long-run and short-run demand elasticities are the same.

Question

Quizplus · Accepted Answer

In the short run, consumers may have fewer alternatives to the product, and therefore may be less responsive to price changes. In the long run, however, consumers may have more time to adjust their behavior, and may be able to find substitutes or change their consumption patterns, making demand more elastic. In the short run, consumers may not have many substitutes or alternatives to a particular product, making their demand for it relatively inelastic. However, over time, consumers may be able to find substitutes or switch to alternative products, allowing for greater price sensitivity and a more elastic demand curve in the long run. Therefore, for many products, long-run demand is likely to be more price elastic than short-run demand.

Which of the Following Statements Best Describes the Relationship Between