Environmental economic:
A/What is the difference conceptually between the short-run versus the long-run price elasticity of demand for water? Empirically, how large might the difference be in quantitative terms? If you were a planner working for the Phoenix Water department and you anticipated a situation of water shortage within the next few months, which of the two demand elasticities would be the more relevant for your plans, and why? Alternatively, suppose you were working on report assessing the cityâs Water Plan, looking at water supply capacity that will be needed in Phoenix over the period 2020-2030. Which of the two demand elasticities would be the more relevant for your work, and why?
B/ What about the difference between the short-run versus the long-run price elasticity of demand for Coca Cola? Do you think that would larger than the difference between the short-run versus the long-run price elasticity of demand for water, smaller, or about the same size?