The Price Elasticity of Demand for Gasoline in the Long

question 201

Multiple Choice

The price elasticity of demand for gasoline in the long run has been estimated to be 1.5.If an extended war in the Middle East caused the price of oil (from which gasoline is made) to increase and remain high for a decade,how would that affect total expenditures on gasoline in the long run,all other things equal?

• A)Total expenditures would rise.
• B)Total expenditures would fall.
• C)Total expenditures would remain unchanged.
• D)The information is insufficient to answer the question.

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