I thought it was inelastic because there are no substitutes…
but this question from CFAI states
“the longer the time that has elapsed since a price change, the more elastic demand is” then explains about the gas situation, where people can’t adjust to the price quickly therefore it is elastic.
but it has no substitutes?
if there are 2 gas stations–A and B-- and A offers 10cents less a gallon, people would all go to A, in that sense, it is elastic. But if the price of the gas doubles the next day, we all would still have to buy gas to go to work and in that sense, it is inelastic… just wanted to add…
In the short term, gas is inelastic as consumers do not have a short term alternative. However, in the long-term, gas becomes more elastic as consumers find alternative (electric cars, buses, more efficent cars etc)
Not to put too fine a point on it, but gas is neither elastic nor inelastic; the _ demand _ for gas might, however, be price-elastic, or price-inelastic.
It depends on the criteria you’re evaluating elasticity against. In your example from the book, it seems like it is comparing elasticity of gas in relation to elapsed time since change in price. What I’m gettign at is that you have to think of each scenario as “all else equal” to be able to get the difference in conclusions about elasticity. Hope this helps!