If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because
A)buyers of steel are more sensitive to a price change if they have more time to adjust to the price change.
B)buyers of steel are less sensitive to a price change if they have more time to adjust to the price change.
C)sales revenue in the building industry will fall sharply.
D)profits will fall by a greater amount in the long run than in the short run.

Question

Quizplus · Accepted Answer

The statement is referring to the long-run price elasticity of demand for steel. When the price of steel increases drastically, buyers in the building industry will have more time to adjust to the higher price and find alternatives or reduce their demand for steel altogether. This means that the quantity demanded will be more sensitive to price changes in the long run. Therefore, choice A is the best answer. Choice B is incorrect because buyers are generally more sensitive to price changes in the short run as they have less time to adjust to the change. Choices C and D are not necessarily true and are not related to the elasticity of demand for steel in the building industry.

If the Price of Steel Increases Drastically, the Quantity of Steel