The Average Price of Gasoline in June of 2008 in the United

question 26

Essay

The average price of gasoline in June of 2008 in the United States was $3.79. This was up by 82 cents from the previous year. Forecasters are expecting a drop in gasoline consumption of about 1% for the first time in 16 years. Even though this is a historic moment what do the figures still demonstrate about the elasticity of demand for gasoline? If the price increases go unabated what is likely to happen to the long-run price elasticity for gasoline and why?

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Definitions:

Adjusting Entries

Journal entries made in accounting to allocate income and expenses to the period in which they actually occurred.