Why do longrun elasticities of demand differ from shortrun e

Why do long-run elasticities of demand differ from short-run elasticities? Long-run elasticities of demand differ from short-run elasticities because A. it takes time for people to change their consumption habits. O B. durable goods last a relatively long time. O C. firms may be constrained in the short run by production capacity 0 D. both A and B are correct. 0 E. all of the above.

Solution

Both A and B are correct.

Explanation:

Elasticity is the measurement of the responsiveness. Elasticity is greater in long-run than in the short-run because longer the time frame, the more time is available to respond.

For some goods, if the price of the good is increased / decreased, the people will buy the same quantity in the short - run but in the long- run the consumption of that good will be decreased / increased as in long run they will get more time to change their consumption habits.

Demand of durable goods are more elastic in short run than in the long run because surable goods last a relatively long time and people will only buy them when they wore out or become obsolete.