During Last Year the Price of Regular Unleaded Gasoline in Oakland,California

question 84

Multiple Choice

During last year the price of regular unleaded gasoline in Oakland,California increased 11.0 percent.If the price elasticity of demand for gasoline was 0.13,the price hike means that the quantity demanded decreased by

• A) 1.43 percent.
• B) 8.46 percent.
• C) 0.16 percent.
• D) 4.31 percent.
• E) 6.46 percent.

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Definitions:

Advertising Expenditure

The amount of money a company spends on promoting its products or services through various advertising channels.

Advertising Elasticity of Demand

The responsiveness of the quantity demanded of a product to a change in the expenditure on advertising.

Rule of Thumb for Advertising

Simplified principles or guidelines that provide a baseline for allocating advertising budgets or measuring advertising effectiveness.

Price Elasticity of Demand

An indicator of the responsiveness of demand for a product to variations in its price, demonstrating how sensitive the quantity of the product demanded is to price fluctuations.