If E₁ is the demand elasticity for a product after a price change has been in effect one day,E₂ is the demand elasticity for that product after one week,and E₃ is demand elasticity for that product after one month, A)|E₁| |E₂| |E₃| B)|E₂| |E₃| |E₁| C)|E₃| |E₁| |E₂| D)|E₃| |E₂| |E₁|

Question

If E₁ is the demand elasticity for a product after a price change has been in effect one day,E₂ is the demand elasticity for that product after one week,and E₃ is demand elasticity for that product after one month, A)|E₁| > |E₂| > |E₃| B)|E₂| > |E₃| > |E₁| C)|E₃| > |E₁| > |E₂| D)|E₃| > |E₂| > |E₁|

Quizplus · Accepted Answer

Typically, demand elasticity decreases as time passes after a price change. In other words, consumers will have a more immediate and pronounced reaction to a price change than they will after a period of time has passed. Therefore, |E₁| > |E₂| > |E₃| is not a likely scenario. The most plausible sequence based on the given information is that |E₃| > |E₂| > |E₁|.

If E1 Is the Demand Elasticity for a Product After

If E₁ Is the Demand Elasticity for a Product After