As the time frame shifts from the short run to the long run,what happens to consumers who are subject to a binding price floor?
A) They are increasingly willing to substitute away from the good,and the demand curve becomes less elastic.
B) There are no changes,and elasticity remains unchanged.
C) They are less willing to substitute away from the good,and the demand curve becomes less elastic.
D) They are increasingly willing to substitute away from the good,and the demand curve becomes more elastic.
E) They are less willing to substitute away from the good,and the demand curve becomes more elastic.

Question

Quizplus · Accepted Answer

In the long run, consumers have more time to find substitutes for a good that is subject to a binding price floor, making them more willing to substitute away from the good. This increases the elasticity of demand as consumers are more responsive to price changes over time.

As the Time Frame Shifts from the Short Run to the Long