Compared to the Short-Run Price Elasticity of Demand, the Long-Run

question 137

Multiple Choice

Compared to the short-run price elasticity of demand, the long-run price elasticity of demand is

• A) smaller.
• B) the same.
• C) greater.
• D) either greater than or less, depending on the number of substitutes the good has.

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Definitions:

Returns to Scale

Describes how a firm's output changes as inputs are increased proportionately.

Decreasing

A process or trend of becoming smaller or less in amount, size, degree, or value.

Lagrange Multipliers

A method used in optimization to find the maximum or minimum of a function subject to constraints.

Marginal Cost of Production

Another term for Marginal Cost, emphasizing the specific focus on production expenses.