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As changing market conditions raise or lower the price of a product, both consumers and producers will respond. However, the response will not be instantaneous, and it is likely to become larger over time. In general, when the price of a product increases, consumers will reduce their consumption by a larger amount in the long run than in the short run. Thus, the demand for most products will be more elastic in the long run than in the short run. This relationship between elasticity and the length of the adjustment period is sometimes referred to as the second law of demand.
The first law of demand says that buyers will respond predictably to a price change, purchasing more when the price is lower than when the price is higher, if other things remain the same. The second law of demand says that the response of buyers will be greater after they have had time to adjust more fully to a price change.

The bank may impose a limit on the company’s net-debt-to-equity ratio. The objective of such a covenant is to prevent the company from taking on more debt by borrowing from another bank or issuing bonds or commercial paper. Any such action would result in a reduction in the company’s ability to service its borrowing.