Suppose You Are Advising the Government on Changes in the Gasoline

question 35

Multiple Choice

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Short- run price elasticity of demand is constant at 0.3.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the short run by

• A)50%,and total expenditure will fall.
• B)15%,and total expenditure will fall.
• C)15%,and total expenditure will rise.
• D)12%,and total expenditure will rise.
• E)13.3%,and total expenditure will rise.

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Definitions:

Amine Subtype

Refers to the classification of chemicals or receptors in the brain based on their ability to interact with specific types of amine neurotransmitters.

Small-molecule Neurotransmitters

Chemical substances used by neurons to communicate with each other across synapses, including amino acids, monoamines, and acetylcholine.

Glycine

An amino acid neurotransmitter in the central nervous system that primarily inhibits or decreases the activity of neurons.

Renshaw Loop

A neurological feedback circuit within the spinal cord involving Renshaw cells that helps modulate motor neuron activity.