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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?

To determine

Whether the elasticity of demand and supply will be higher in short run or in long run.

Explanation

The elasticity of demand and supply is lower in the short run as compared to the long run. For consumers the elasticity of demand is lower in the short run because there is less availability of perfect substitutes in the short run. When the price of price of a product rises, it becomes difficult to switch on other goods which may or may not be perfect substitutes. It takes time to shift the consumption pattern in the short run. However, in the long run, as new product comes in the market, the elasticity of demand rises and consumer can easily shift on other products...

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