Question

a large increase in gas prices creates a demand for cars with good gas milage. It takes months for car companies to make these cars. How do you describe this market for cars

Answer 1

A large increase in gas prices creates a demand for cars with good gas milage. It takes months for car companies to make these cars.This market for cars can be described as inelastic.

This happens when a change in price leads to a smaller percentage change in demand. It is inelastic because In the short-run it takes time for consumers to look for alternatives.