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If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

a) immediately after the price increase
b) one month after the price increase
c) three months after the price increase
d) one year after the price increase

User Elmue
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1 Answer

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Final answer:

The price elasticity of demand is likely to be the highest one year after the price of natural gas rises, as consumers have time to adjust and find alternatives.

Step-by-step explanation:

If the price of natural gas rises, the price elasticity of demand is likely to be the highest one year after the price increase (d). Price elasticity of demand tends to increase over time as consumers have more time to adjust to the change in price, find alternatives, or change their consumption habits. Immediately after the price increase, consumers may still be locked into their current consumption patterns due to a lack of immediate alternatives or the entrenchment of current habits or contracts. As time passes, alternatives become more feasible, and consumers become more responsive to the change in price.

User Prakash H
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