If research finds demand elasticities of 0.05 and 0.6 for the same good or service, then
A) both are definitely short-run demand elasticities.
B) both are definitely long-run demand elasticities.
C) 0.05 is the short-run demand elasticity and 0.6 is the long-run demand elasticity.
D) 0.6 is the short-run demand elasticity and 0.05 is the long-run demand elasticity.

Question

Quizplus · Accepted Answer

Demand elasticity tends to be lower in the short run because consumers have less time to adjust their behaviors. Over the long run, as consumers find alternatives or adjust their habits, demand elasticity typically increases. Therefore, 0.05 would represent the short-run demand elasticity (less responsive), and 0.6 would represent the long-run demand elasticity (more responsive).

If Research Finds Demand Elasticities of 0