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Chapter 5: Q.19 (page 130)

Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?

Short Answer

Expert verified

In short run the demand is more elastic and supply is more elastic in long run.

Step by step solution

01

Step 1. Introduction:

The elasticity of demand and supply is majorly influenced by the time period of the production process.

02

Step 2. Explanation:

Because it takes time to adjust output to supply extra or less of a commodity, demand is likely to be highly elastic in the short run. Supply, on the other hand, is anticipated to be highly elastic, as sellers have an almost limitless capability to modify supply in response to price changes.

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Most popular questions from this chapter

Because the demand curve for oil is _______ elastic in the long run, OPEC’s reduction in the supply of oil had a ________ impact on the price in the long run than it did in the short run.

a. less; smaller

b. less; lager

c. more; smaller

d. more; larger

A city has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about the elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain.

What is the formula for the cross-price elasticity of demand?

Under which circumstances does the tax burden fall entirely on consumers?

The price of a good rises from \(16 to \)24, and the quantity supplied rises from 90 to 110 units. Calculated with the midpoint method, the price elasticity of supply is

a. 1/5.

b. 1/2.

c. 2.

d. 5.
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