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Question
How do consumers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?
a. Consumers are increasingly willing to substitute away from the good, and their elasticity of demand becomes less elastic.
b. There are no changes, and elasticity remains unchanged.
c. Consumers are increasingly willing to substitute away from the good, and their elasticity of demand becomes more elastic.
d. Consumers are less willing to substitute away from the good, and their elasticity of demand becomes less elastic.
e. Consumers are less willing to substitute away from the good, and their elasticity of demand becomes more elastic.
Answer
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