Suppose You Are Advising the Government on Changes in the Gasoline

question 37

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.Long-run price elasticity of demand is constant at 0.8.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 long run by

• A)12%,and total expenditure will fall.
• B)32%,and total expenditure will rise.
• C)15%,and total expenditure will rise.
• D)15%,and total expenditure will fall.
• E)50%,and total expenditure will rise.

---

Definitions:

Diversity

The practice or quality of including or involving people from a range of different social and ethnic backgrounds and of different genders, sexual orientations, etc.

Charter

A formal document outlining the rights, objectives, rules, strategies, or functions of a city, organization, or other entity.

Demonstrably Justified

Clearly supported or proven to be reasonable or necessary under the circumstances.

Free And Democratic Society

A type of society where individuals have the liberty to express their opinions, enjoy rights and freedoms, and participate in fair and open elections to choose their leaders.