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Chapter 5: Q. 19 (page 130)

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

Short Answer

Expert verified

Demand is higher in the long run.

Step by step solution

01

Step 1. Definition

The elasticity of demand reflects the change in consumer demand due to the change in the price of the commodity. The elasticity of demand can be influenced due to various factors, including the durability of the good, nature of the good, availability of substitutes etc.

02

Step 2. Explanation

Because it is easier to change quantity demanded in long run than in short run.

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Most popular questions from this chapter

The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.

If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?

A city has built a bridge over a river and it decides

to charge a toll to everyone who crosses. For one year,

the city charges a variety of different tolls and records

information on how many drivers cross the bridge. The

city thus gathers information about elasticity of demand.

If the city wishes to raise as much revenue as possible

from the tolls, where will the city decide to charge a toll:

in the inelastic portion of the demand curve, the elastic

portion of the demand curve, or the unit elastic portion?

Explain.

If supply is inelastic, will shifts in demand have a larger effect on equilibrium price or on quantity?

What would the gasoline price elasticity of supply mean to UPS or FedEx?
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