question archive Why is the long-run demand for a nondurable item more income elastic than the short-run demand? Why might the same rule not apply to the demand for a durable item?
Subject:EconomicsPrice:2.88 Bought3
Why is the long-run demand for a nondurable item more income elastic than the short-run demand? Why might the same rule not apply to the demand for a durable item?
Non-durable items are those which can only be consumed in a short time as they wear out so soon. Durable goods can be consumed for a long time.
The long-run demand for a non-durable item is more income elastic than the short-run demand because of availability of more substitutes. So, consumers don't buy non-durable goods at a low income in the long-run. In the case of short-run, non-durable items have more inelastic demand as there are fewer substitutes available for the same good. Consumers purchase non-durable products even at low income in the short-run because of needs.
The same rule doesn't apply for durable goods because durable goods don't get wasted. People can also resale durable goods and get some earnings after depreciation. For example, a person can buy a car at a low price and can sell that after using it for some time.