Answer:
If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is less elastic in the short run than in the long run.
Explanation:
Price elasticity of demand is the responsiveness of quantity demanded to a change in price. In other words, how much quantity demanded changes when there is a change in price. There are five cases of price elasticity of demand with the first having the highest change (responsiveness) to a change in price and the fifth having the lowest:
In the short run, when there is a rise in price of gasoline, customers cannot easy switch to other modes of transportation or purchase a more fuel-efficient car due to constraints such as time or money. Hence, even when price is high, the customers able to switch will switch to other options but most of the others would buy gasoline at a high price. This deems that the change in quantity demanded to a change in price is low.
However, in the long run, customers would have access to other transportation methods or may have already purchased fuel-efficient vehicles and would not be necessitated to buy gasoline at high prices. Thus, when gasoline prices rise, they can easily switch to other alternatives or substitutes, making change in quantity demanded more responsive to a change in price.
Hence, change in quantity demanded to a change in price is less elastic in the short run than the long run.
