The Price Elasticity of Demand for Gasoline in the Short

question 285

Essay

The price elasticity of demand for gasoline in the short run has been estimated to be 0.4.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total revenue from gasoline in the short run, all other things unchanged?
A.Quantity demanded will stay the same; total revenue will fall.
B.Quantity demanded will decrease; total revenue will rise.
C.Total revenue will remain unchanged.
D.Demand will not change; total revenue will rise.

Learn the definitions and examples of market terminologies and measurements, like cutthroat competition and collusion.

Analyze the effects of firm behaviors on competitors and how it informs competitive strategies.

Understand the limitations of using concentration ratios for analyzing industry competitiveness.

Understand the concept of the kinked demand curve and its association with oligopolistic competition.

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Definitions:

Death Rates

The number of deaths per unit of population within a specified time period, often expressed per 1,000 or 100,000 individuals annually.

Economically

Pertaining to the management, production, and distribution of goods and services in a financial context.

Doubling Time

The period it takes for a quantity to double in size or value, often used in demography to describe the rate of population growth.

Population Growth

The increase in the number of individuals in a population, often measured by the rate at which the population is increasing.