Answer:
Elasticity of demand tends to be more price inelastic in the short run
In the long run, consumers become more aware of alternatives
Elasticity of Supply is the measure of the responsiveness in quantity supplied to a change in price for a specific good
Explanation:
<u>Elasticity of Demand in Short run</u>
In the short run demand is likely be more inelastic (low = less than 1)
If people are used to buying a good, then when the price goes up, they will tend to keep buying it out of habit. However, when they realise the price rise is permanent they will expend more energy and time in looking for alternatives.
<u>Elasticity of Demand in the Long-run</u>
If the price of a good is expensive for a considerable time period, consumers looking to save money will start trying to find alternatives.
if the goods take a higher percentage of disposable income they may make large changes to their lifestyle.
<u>Elasticity of supply in short-run</u>
The short-run is such a period in which the fixed factors like plants, machinery , etc. cannot be changed. The firm can, therefore raise output by increasing the quantities of variable factors such as labour.
<u>Elasticity of supply in the long-run</u>
The long run supply of a perfectly competitive industry indicates the various quantities of a product offered at various prices. In the long run, the firms can change the existing plant and equipment and they can enter or leave the industry, so that price is always equal to both marginal cost as well as the minimum average cost (Price =LMC = LAC).
