Question

As the prices in markets change, buyers and sellers respond in different ways according to how much time they have to react. Match the time period to its correct description.

(1) short run
(2) immediate run
(3) long run

(A) Demand is somewhat elastic. Buyers have some time to adjust to a change in the market.
(B) Buyers have no time to adjust to a change in the market. Demand is inelastic.
(C) Buyers have a significant amount of time to adjust to a change in the market. Demand is elastic.

Answer 1

(1) Short run - (A)

(2) Immediate run - (B)

(3) Long run - (C)

In a short run, all the changes occur in an economy are for shorter time period and buyers have little time to respond to these changes. Hence, the demand curve is elastic in nature.

In an immediate run, there will be no time for the consumers to respond to the changes occur in an economy. Suppose there is an increase in the prices of the goods, as a result there will no changes occur in the quantity demanded. Hence, the demand curve is inelastic, means that there is no effect on quantity demanded.

In a long run, there is enough or more than enough time for the consumers to respond to the changes. Hence, the demand curve is elastic in nature.