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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