A large increase in gas prices creates a demand for cars with good gas mileage. It takes months for car companies to make these cars. How do you describe this market for cars?
A. inelastic
B. elastic
C. static
D. inferior

Question

A large increase in gas prices creates a demand for cars with good gas mileage. It takes months for car companies to make these cars. How do you describe this market for cars?
	A. inelastic 	
	B. elastic 	
	C. static 	
	D. inferior

2yoututu11 · Answer

The car industry is an example of an oligopoly, where there are limited, but big producers of a certain good.

anonymous · Answer

I would say inelastic. For one, the rest don't make any sense.

anonymous · Answer

B elastic is changing, it is a changing adaptable market.  The answer is definitely B

anonymous · Answer

Wouldn't the fact that it takes long time for the market to adjust to demand make it inelastic?

anonymous · Answer

@artmilko has some nice reasoning, but in this case, I believe @maxine4seen is correct. Check out the definition of elastic (in economic terms): http://www.investopedia.com/terms/e/elastic.asp#axzz1taBntpVX Gas price goes up, demand goes up. Inelastic would describe a situation where increasing gas prices do not result in a greater demand for fuel efficient cars.

anonymous · Answer

it is not (B)

anonymous · Answer

@artmilko is correct- definitely inelastic