question archive How does the short-run price elasticity of demand for gasoline compare to its long-run price elasticity of demand? Elucidate
Subject:EconomicsPrice:2.88 Bought3
How does the short-run price elasticity of demand for gasoline compare to its long-run price elasticity of demand? Elucidate.
In Economics there is believed to be a difference between the value of the price elasticity of demand for a product in the long run in comparison to the short run. The economic reason behind such a difference between the elasticity level across time is the time which the consumers receive in order to alter their consumption behaviour, the manner of usage, taste and preferences in regard to that particular product in the market. For instance - the short-run price elasticity of demand for gasoline is believed to be higher in comparison to the long-run price elasticity of demand for gasoline in the market because the rational consumers are assumed to be relatively more cable and flexible in order to alter their consumption strategy (switching over to other resources like natural gas, fuel-efficient automobiles) in the long run in comparison to the short run.