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2 weeks ago

Question 1.

"The price elasticity of demand for a particular good is smaller in the long run because consumers adapt to higher prices over time." Do you agree or disagree? Explain.

Question 2.

Suppose that the cross price elasticity of demand between good X and good Y is -1.55. This indicates that the two goods are

• complements.

• both inferior.

• substitutes.

• completely unrelated in the minds of consumers.
Source  Download
Economics Today: The Micro View
Edition: 19th
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wrote...
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2 weeks ago
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Answer 1

Disagree. Price elasticity of demand is related to a particular good rather than all the goods that individuals may consume. In the long run, consumers can find more substitutes. Thus, the price elasticity of demand of a particular good is actually greater in the long run than in the short run.

Answer 2

complements.
1
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