Recall the Application About How Changes in Supply Affect the Price

question 98

Multiple Choice

Recall the Application about how changes in supply affect the price of gasoline,suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

• A)The equilibrium price will increase by 3%.
• B)The equilibrium price will decrease by 3%.
• C)The equilibrium price will increase by 33.33%.
• D)The equilibrium price will decrease by.33.33%

---

Definitions:

Power Distance

A cultural dimension that describes the extent to which individuals in a society accept and expect power to be distributed unequally.

Full-time Work

Employment in which individuals work a minimum number of hours defined by their employer as full-time, typically around 40 hours per week.

Monotheism

The belief in the existence of only one god that created the world, omnipotent and omniscient.

Material Possessions

Physical items or assets owned by an individual or entity.