Question

Could the price elasticity of supply for a particular good differ between the short-run and the long-run? Explain with an example

Answer 1

For produced goods, supply is typically more elastic over the long term compared to the short term because it is generally believed that over the long term, all production factors can be used to increase supply, whereas over the short term, only labor can be increased and even then, changes may be prohibitively expensive.

Because consumers don't have time to look for alternatives, demand is typically more price inelastic in the short term. Consumers eventually grow more aware of their options. The responsiveness of demand to a change in price is measured by price elasticity of demand. Electricity demand's price elasticity is higher over the long term and lower over the short term.

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