Suppose the Short-Run Price Elasticity of Demand for Gasoline Is

question 8

Multiple Choice

Suppose the short-run price elasticity of demand for gasoline is 0.4.Acting on this information,one gasoline station at an intersection where there are three additional gasoline stations raises its price by 10 percent.If the other three stations keep their original prices,the first gasoline station will probably see its gasoline sales

• A) increase by 0.4 percent.
• B) remain unchanged.
• C) fall by 0.4 percent.
• D) fall by 4 percent.
• E) fall by more than 4 percent.

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Definitions:

Gross Profit

The financial metric that represents the difference between revenue and the cost of goods sold before accounting for other expenses.

Department

A distinct area, division, or branch of an organization with specific roles or functions.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net profit or loss.

Cash Flow Statement

A financial document detailing the inflow and outflow of cash in a business, thereby indicating its operating, investing, and financing activities over a period.