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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

In short run the demand is more elastic and supply is more elastic in long run.

Step by step solution

01

Step 1. Introduction:

The elasticity of demand and supply is majorly influenced by the time period of the production process.

02

Step 2. Explanation:

Because it takes time to adjust output to supply extra or less of a commodity, demand is likely to be highly elastic in the short run. Supply, on the other hand, is anticipated to be highly elastic, as sellers have an almost limitless capability to modify supply in response to price changes.

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Most popular questions from this chapter

What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?

If the price elasticity of supply is zero, the supply curve is

a. upward sloping.

b. horizontal.

c. vertical.

d. fairly flat at low quantities but steeper at large quantities.

What is the formula for calculating elasticity?

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

The average annual income rises from \(25,000 to \)38,000, and the quantity of bread consumed in a year by the average person falls from 30 loaves to 22 loaves. What is the income elasticity of bread consumption? Is bread a normal or an inferior good?
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