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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

A storm destroys half the fava bean crop. Is this event more likely to hurt fava bean farmers if the demand for fava beans is very elastic or very inelastic? Explain.

Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?

The equation for a demand curve is P = 48 – 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?

What is the formula for elasticity of savings with respect to interest rates?

In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because

a. each farmer is a price taker.

b. farmers are short-sighted.

c. regulation requires the use of best practices.

d. consumers pressure farmers to lower prices.
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