Question

C. firms may be constrained in the short run by production capacity D. both A and B are correct O E all of the above Consider two goods: paper towels and televisions Which is a durable good? televisions Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why? The price elasticity of demand for paper towels should be larger O A. in the long run as new substitutes enter the market O B. in the long run because paper towels are made in a cyclical industry. c. in the long run because some firms may be constrained by production capacity O D. in the short run because it takes time for people to respond to price changes. O E. in the short run because paper towels are non-durable. Click to select your answer and then click Check Answer part remaining Clear All

Answer 1

Television is durable good.

The price elasticity of demand for paper towel should be larger in long run as new substitutes enter in the market.

Ans is A)

Explanation:

Long-run and short-run elasticities differ based on how rapidly consumers respond to price changes and how many substitutes are available. If the price of paper towels, a non-durable good, were to increase, consumers might react only minimally in the short run. In the long run, however, demand for paper towels would be more elastic as new substitutes entered the market (such as sponges or kitchen towels).