Jim Has Estimated Elasticity of Demand for Gasoline to Be

question 84

Multiple Choice

Jim has estimated elasticity of demand for gasoline to be -0.7 in the short-run and -1.8 in the long run. A decrease in taxes on gasoline would:

• A)​lower tax revenue in both the short and long run. 
• B)raise tax revenue in both the short and long run.
• C)raise tax revenue in the short run but lower tax revenue in the long run. 
• D)​lower tax revenue in the short run but raise tax revenue in the long run. 

---

Definitions:

Cost

The amount of money required to purchase, produce, or maintain something, often considered in business and financial contexts.

Markup Percent

The percentage increase on the cost price of goods to arrive at the selling price.

Selling Price

The amount of money for which a product or service is sold to customers.

Markup Percent

The percentage added to the cost price of goods to cover overhead and profit.