Most Studies Show That the Price Elasticity of Demand for Gasoline

question 18

Multiple Choice

Most studies show that the price elasticity of demand for gasoline is -0.2.If the price elasticity of supply is 2, then a tax on gasoline will:

• A)cause the market equilibrium price of gasoline to fall.
• B)cause the market equilibrium price paid by buyers to rise.
• C)cause the net price received by sellers to fall.
• D)both (b) and (c) are correct.

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