Question

Although higher gas prices eventually encourage consumers to cut back on driving or switch to more fuel-efficient vehicles, in the short-run they may have few options but to cut back on other expenditures in the family budget. in the short run, the price elasticity of demand is most likely to be question 3select one:

Answer 1

In the short run, the price elasticity of demand for energy is inelastic, but it becomes more elastic in the long run.

In the short run, the price elasticity of demand for energy is most likely to be inelastic. This means that a change in the price of gas will have a relatively small impact on the quantity demanded in the short term. Consumers may have few options but to cut back on other expenditures in the family budget.

However, in the long run, consumers have more flexibility to make changes. They can purchase more fuel-efficient vehicles, choose jobs closer to where they live, or invest in energy-efficient home appliances. As a result, the price elasticity of demand for energy becomes more elastic in the long run.