2.27. In a city, the price for a trip on local mass transit

(such as the subway or city buses) has been 10 pesos for a number of years. Suppose that the market for trips is characterized by the following demand curves: in the long run: Q ! 30 "2P; in the short run: Q ! 15 " P 2.

Verify that the long-run demand curve is “flatter” than the short-run curve. What does this tell you about the sensitivity of demand to price for this good? Discuss why this is the case.