Price elasticity of demand tends to be larger in the long run than in the short run. Which of the following is consistent with the reason why?
a. Because people see fewer and fewer substitutes for the good in the long run.
b. Because if price rises, over time producers will be able to offer more substitutes.
c. Because over time the good will become a smaller and smaller share of peoples' budget.
d. Because over time people's incomes rise.
b
Economics
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If the price of oranges went up by 20 percent, which of the following values of the cross price elasticity for apples would be most reasonable to anticipate?
A) 0.0 B) 1.2 C) -2.0 D) -0.2
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A tax on cigarettes:
A. increases total surplus. B. increases efficiency in the market. C. like any tax, will always reduce surplus and efficiency in markets. D. will increase both total surplus and efficiency in the market.
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