Holding All Other Forces Constant, When the Price of Gasoline

question 171

Multiple Choice

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a 10-year period because:

• A)buyers tend to be much less sensitive to a change in price when given more time to react
• B)buyers will have substantially more income over a 10-year period
• C)buyers tend to be much more sensitive to a change in price when given more time to react
• D)none of these answers are correct

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Definitions:

Optimal Employment

The level of employment where the economy is at its most efficient, producing the maximum output without causing inflationary pressures.

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Marginal Product

The additional output resulting from the use of one more unit of a variable input, holding other inputs constant.

Optimal Employment

The level of employment where the productivity is maximized in relation to the number of employed workers.