Question

If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is_______elastic in the short run than in the long run.

a. more elastic.
b. less elastic.

Answer 1

Less Elastic in Short run than Long Run

Step-by-step explanation:

Elasticity is responsive demand change due to price change.

Elastic Demand : Demand changes proportionately more than price change. Inelastic Demand : Demand changes proportionately less than price change.

If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars or switch to alternatives like public transportation. This implies that gasoline's demand responds more to price change in long run , so it is elastic in long run. Such because vehicles are long term assets & can be more feasibly changed in long run that in short run. This makes their demand in short run comparatively less respondent to price i.e Inelastic.