Why are long-run demand curves likely to be more elastic than short-run demand curves?
A)Prices tend to rise in the long-run.
B)Prices tend to be stable in the long-run.
C)Consumers have more time to adjust their purchase decisions in response to a change in price.
D)Supply tends to adjust in the long run.

Question

Quizplus · Accepted Answer

In the long-run, consumers have more time to adjust their purchase decisions in response to a change in price, leading to a more elastic demand. Short-run demand is less elastic because consumers have less time to make adjustments. Additionally, in the long-run, supply tends to adjust, leading to potentially more competition and further increasing demand elasticity. In the long run, consumers have more time to adjust their purchase decisions in response to a change in price, making the demand curve more elastic. In the short run, consumers may not have the time or information necessary to adjust their behavior, leading to a less elastic demand curve.

Why Are Long-Run Demand Curves Likely to Be More Elastic