Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-Other things remaining unchanged, the longer the time period under consideration, the greater will be the price elasticity of demand.

Question

Quizplus · Accepted Answer

Over time, consumers may have more options and substitutes for noodles, making them more sensitive to changes in price. This would increase the price elasticity of demand, causing a greater change in quantity demanded in response to a change in price.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation