Question

The shorter the period of time consumers have to adjust to a price change, the _____________ will be the price elasticity of ______________. a. lower, demand b. higher, demand c. lower, supply d. higher, supply

Answer 1

Answer:

lower , demand

Explanation:

Price Elasticity of Demand [P.Ed] is the responsive change in demand due to change in price.

P.Ed is affected by many factors : Substitute availability, Consumer Income, Nature of product, Product use(s), role of habits, price adjustment time/ urgency of demand.

The P.Ed factor mentioned in the question is price adjustment time/ urgency of demand'

• If there is short time period for consumers to adjust to a price : the demand will respond less to price change. So, P.Ed is lower. Demand is less elastic in this case.  
• If there is more time period for consumers to adjust to a price : the demand will respond more to price change. So, P.Ed is higher. Demand is more elastic in this case.

Demand is more elastic in long time period than in short time period