CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

When people have very little time to respond to price changes, demand becomes ______.

A. more elastic
B. less elastic
C. Time does not affect the price elasticity of demand.
Correct Answer: B

If you have little time to respond to a price change, you will likely make the purchase you are in the habit of making. This suggests a less elastic demand curve.

User Contributed Comments 3

User Comment
muthure this answers why lots of you thought entertainment will be more elastic than housing ... it takes lesser time to not party than to shift houses
stan68 oh, it should be lesser time to find alternatives and makes the demand curve inelastic
Jurrens murthure: This is true, but housing being such a large part of your income, you will react to a hike in price. Where as with entertainment, you might not respond as quickly to a price hike, because it is less of your income and a percentage increase has less affect on you.
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