Is demand for electricity more price elastic when measured over a short period of time or a long period of time? Explain.

What will be an ideal response?


It is more price elastic over a long period of time because there are more substitutes in a long period of time. If electricity prices get high people have little choice but to pay them in the short run. In the long run people can invest in solar heat, use gas stoves, add insulation, and do other things to reduce their consumption of electricity. Since there are more substitutes in the long run the elasticity is higher.

Economics

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Economics

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Economics