HOW DOES TIME HORIZON AFFECT PRICE ELASTICITY OF DEMAND FOR A PRODUCT ?
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Answered by
22
Heya....
====== Answer =====
Price elasticity is the measurement of degree of % change in Quantity demanded of a good when the % change in price occur...
_____ Time horizon affect _____
• Short time period
It's the short term in that a consumer can delay the use of a good...
So the elasticity is inelastic ....
As the price doesn't matter for the sudden use in short time....
Ex - We have to buy clothes for a close function , then prices doesn't matter, we will buy at any cost ..
• Long term
It's a long time to adjust with price become lower and we can delay the deal..
So the elasticity is elastic...
As we can stop for sometime to buy that good..
Ex - We need to buy clothes for a 2 months after function...We van wait for 2 months...
Thank you
====== Answer =====
Price elasticity is the measurement of degree of % change in Quantity demanded of a good when the % change in price occur...
_____ Time horizon affect _____
• Short time period
It's the short term in that a consumer can delay the use of a good...
So the elasticity is inelastic ....
As the price doesn't matter for the sudden use in short time....
Ex - We have to buy clothes for a close function , then prices doesn't matter, we will buy at any cost ..
• Long term
It's a long time to adjust with price become lower and we can delay the deal..
So the elasticity is elastic...
As we can stop for sometime to buy that good..
Ex - We need to buy clothes for a 2 months after function...We van wait for 2 months...
Thank you
Answered by
4
Elasticity is the measurement of degree of percentage change in quantity demanded of a good when the percentage change in price occur...
Time horizon affect
→Demand is generally inelastic in the short period.
It happens because consumers find it difficult to change their habits, in the short period, in order to respond to a change in the price of the given commodity.
→However, demand is more elastic in long rim as it is comparatively easier to shift to other substitutes, if the price of the given commodity rises.
Time horizon affect
→Demand is generally inelastic in the short period.
It happens because consumers find it difficult to change their habits, in the short period, in order to respond to a change in the price of the given commodity.
→However, demand is more elastic in long rim as it is comparatively easier to shift to other substitutes, if the price of the given commodity rises.
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