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The Price Elasticity of Demand for Gasoline in the Short

question 142

Multiple Choice

The price elasticity of demand for gasoline in the short run has been estimated to be 0.1.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase,how will that affect total expenditures on gasoline in the short run,all other things equal?


Definitions:

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting the expenditure necessary to meet basic needs.

Saving Function

Is an economic concept describing the relationship between saving and income, indicating how changes in income levels affect the amount of money individuals save.

Consumption Function

A macroeconomic expression that defines the relationship between total consumer expenditures and gross national income, indicating how income affects spending patterns.

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount borrowed, charged by lenders to borrowers for the use of assets.

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