Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.



Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
For most goods and services, [...] is much more elastic than the short-run demand.
Answer
the long-run demand

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
For most goods and services, [...] is much more elastic than the short-run demand.
Answer
?

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
For most goods and services, [...] is much more elastic than the short-run demand.
Answer
the long-run demand
If you want to change selection, open original toplevel document below and click on "Move attachment"

Parent (intermediate) annotation

Open it
For most goods and services, the long-run demand is much more elastic than the short-run demand. The reason is that if price were to change for, say, gasoline, we probably would not be able to respond quickly with a significant reduct

Original toplevel document

4.1. Own-Price Elasticity of Demand
the price of housing were to rise significantly, however, most households would try to find a way to reduce the quantity they buy, at least in the long run. This example leads to another characteristic regarding price elasticity. <span>For most goods and services, the long-run demand is much more elastic than the short-run demand. The reason is that if price were to change for, say, gasoline, we probably would not be able to respond quickly with a significant reduction in the quantity we consume. In the short run, we tend to be locked into modes of transportation, housing and employment location, and so on. The longer the adjustment time, however, the greater the degree to which a household could adjust to the change in price. Hence, for most goods, long-run elasticity of demand is greater than short-run elasticity. Durable goods, however, tend to behave in the opposite way. If the price of washing machines were to fall, people might react quickly because they have an old machine that they know will need to be replaced fairly soon anyway. So when price falls, they might decide to go ahead and make the purchase. If the price of washing machines were to stay low forever, however, it is unlikely that a typical consumer would buy all that many more machines over a lifetime. Certainly, whether the good or service is seen to be non-discretionary or discretionary would help determine its sensitivity to a price change. Faced with the same percenta


Discussion

Do you want to join discussion? Click here to log in or create user.