Suppose You Are Advising the Government on Changes in the Gasoline

question 60

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

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Definitions:

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A strategy designed to foster customer loyalty, interaction and long-term engagement, developing strong connections with customers by providing them with information directly suited to their needs and interests.

Customer Relationship Management

A strategy for managing an organization's interactions with current and future customers, utilizing data analysis about customers' history with a company to improve business relationships.

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The perception of what a product or service is worth to a customer versus the possible alternatives, reflecting the benefits, costs, and utility they receive.

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The flag carrier airline of Singapore, known for its high level of service and as an important player in international air travel.