Explain the time dimension as it relates to elasticity. Be sure to include in your answer the difference in elasticity between the short run and the long run
What will be an ideal response?
In the short run consumers often don't have as many choices available to them when prices change. Therefore demand for most goods tends to be inelastic in the short run or at least less elastic then they would otherwise be with the passage of time. In the longer run, demand is likely to become more elastic, or responsive, simply because households make adjustments over time and producers develop substitute goods.
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A professional tennis player enters fewer tournaments each year as the prize money she won increased. This observation indicates that the tennis player
A) is irrational. B) has shifted her labor demand curve leftward. C) has shifted her labor supply curve rightward. D) has a backward bending labor supply curve.
The concavity or bowed-out shape of the production possibilities frontier is the result of
a. the law of downward-sloping demand. b. the law of upward-sloping demand. c. the principle of increasing cost. d. complementarity in consumption.