Statement I: In the very short run,the demand for gasoline and home heating oil is almost perfectly inelastic.
Statement II: When American consumers traded in their gas-guzzler automobiles for Japanese fuel-efficient cars from the mid-1970s to the mid 1980s,this was an example of how the demand for gasoline had become more elastic in the long run.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is true because in the very short run, consumers cannot easily change their consumption habits for gasoline and home heating oil, making the demand almost perfectly inelastic. Statement II is true because over time, as consumers had the opportunity to adjust their behavior by switching to more fuel-efficient cars, the demand for gasoline became more elastic, reflecting their ability to respond to changes in gasoline prices.

Statement I: in the Very Short Run,the Demand for Gasoline