The Price Elasticity of Demand for Gasoline in the Long

question 13

Essay

The price elasticity of demand for gasoline in the long run has been estimated to be 1.5.If an extended war in the Middle East caused the price of oil (from which gasoline is made) to increase and remain high for a decade, how would that affect total expenditures on gasoline in the long run, all other things equal?
A.Total expenditures would rise.
B.Total expenditures would fall.
C.Total expenditures would remain unchanged.
D.There is not enough information is given to answer the question.

---

Definitions:

Stable External

A term used to describe factors outside an individual that are consistent and unchanging, influencing behavior or circumstances.

Unstable External

This refers to external attributions for behavior that are variable or subject to change, such as luck or temporary circumstances.

Stable Internal

A term describing traits, beliefs, or motivations within an individual that are consistent over time and across different situations.

Unstable Internal

Attributes or characteristics within an individual that are inconsistent and subject to change.