Consider the following pair of goods. For which of the two goods would you expec

Question

Consider the following pair of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
A) gasoline over the course of a week or gasoline over the course of a year B) personal computers or IBM personal computer Consider the following pair of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
A) gasoline over the course of a week or gasoline over the course of a year B) personal computers or IBM personal computer
A) gasoline over the course of a week or gasoline over the course of a year B) personal computers or IBM personal computer

Explanation / Answer

A. The longer the time period, the more elastic demand is. Therefore, gasoline
over the course of a year has the more elastic demand.
B. There are more substitutes for IBM personal computers than there are for
personal computers. Therefore, IBM personal computers have the more
elastic demand.

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