If the absolute price elasticity of demand is equal to 1 in the short run, then in the long run, other things being equal, the absolute price elasticity of demand will be
A) less than one.
B) less than zero.
C) greater than one.
D) equal to zero.

Question

Quizplus · Accepted Answer

In the long run, consumers have more time to adjust their consumption habits and find substitutes for the product. This makes the demand for the product more responsive to price changes, resulting in a higher absolute price elasticity of demand. Therefore, if the short run price elasticity of demand is 1, in the long run it is likely to be greater than 1.

If the Absolute Price Elasticity of Demand Is Equal to 1