If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be
A) one.
B) less than one.
C) greater than one.
D) indeterminate without more information.

Question

Quizplus · Accepted Answer

In the long run, consumers have more time to adjust their behavior and find substitutes for a product if its price changes, making the price elasticity of demand greater than in the short run. Therefore, if Ep equals one in the short run, it is likely to be greater than one in the long run as consumers have more flexibility to respond to price changes.

If the Price Elasticity of Demand (Ep) Equals One in the Short