demand, short-run versus long-run

Definition:
Short-run demand refers to existing demand, with its immediate reaction to price changes, income fluctuation etc., whereas long-run demand is that which will ultimately exist as a result of changes in pricing, promotion or product improvement, after enough time has elapsed to let the market adjust itself to the new situation. The distinction between short-run and long-run dictates competitive response. In the short run the question is whether competitors will meet the cut in price while in the long run the entry of potential competitors, exploration of substitutes, and other complex factors may affect the response.

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