Suppose You Are Advising the Government on Changes in the Gasoline

question 99

Multiple Choice

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the long-run price elasticity of demand is constant at 0.8.If a tax on gasoline causes the price to rise 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)24% and total expenditure will fall.
• C)32% and total expenditure will fall.
• D)24% and total expenditure will rise.
• E)50% and total expenditure will rise.

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Definitions:

Iliopsoas

A major hip flexor muscle, composed of the iliacus and psoas major muscles, important for walking and running.

Quadriceps

A large muscle group that includes the four prevailing muscles on the front of the thigh, responsible for extending the knee and flexing the hip.

Adductor Femoris

A muscle in the thigh that helps in the adduction and medial rotation of the femur.

Adductor Magnus

A large muscle in the thigh that plays a key role in adducting (bringing towards the midline) and medially rotating the thigh.