If the short-run price elasticity of demand for hospital care is 0.27, then the long-run price elasticity is expected to be:
A) greater than 0.27.
B) greater than 1.
C) less than 0.27.
D) equal to 0.27.

Question

Quizplus · Accepted Answer

In the long run, consumers have more time to adjust their behavior and find substitutes for hospital care. Therefore, the elasticity of demand is typically higher in the long run than in the short run. This means that the long-run price elasticity of demand for hospital care is expected to be greater than 0.27. Choice A is the only option that reflects this expectation.

If the Short-Run Price Elasticity of Demand for Hospital Care