How do consumers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?
A) Consumers are increasingly willing to substitute away from the good,and their elasticity of demand becomes less elastic.
B) There are no changes,and elasticity remains unchanged.
C) Consumers are increasingly willing to substitute away from the good,and their elasticity of demand becomes more elastic.
D) Consumers are less willing to substitute away from the good,and their elasticity of demand becomes less elastic.
E) Consumers are less willing to substitute away from the good,and their elasticity of demand becomes more elastic.

Question

Quizplus · Accepted Answer

In the short run, consumers may not have many alternatives to the good, and thus their demand may be relatively inelastic. However, in the long run, they may find substitutes or alternatives to the good, thereby making their demand more elastic. As a result, consumers become increasingly willing to substitute away from the good, and their elasticity of demand becomes more elastic over time.

How Do Consumers Who Are Subject to a Binding Price