Recent Research Estimates That the Short-Run Price Elasticity of Demand

question 143

Multiple Choice

Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the govenment increases the federal gasoline tax?

• A) Consumer expenditures on gasoline increase over the short run and long run
• B) Consumer expenditures on gasoline decline over the short run and increase over the long run
• C) Consumer expenditures on gasoline increase over the short run and decline over the long run
• D) Consumer expenditures on gasoline decrease over the short run and long run

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Definitions:

Altruism

The selfless concern for the well-being of others, often manifested through actions that are beneficial or intended to help others without expecting anything in return.

Statistical Analysis

The process of collecting, examining, interpreting, and presenting data to discover underlying patterns and trends.

Academically

Relating to education, schooling, or scholarly activities.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial development of humans across eight stages over the lifespan.