Suppose the Quantity of Gasoline Is Measured in Litres and the Price

question 64

Multiple Choice

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars,the price elasticity of demand would be

• A)6.7.
• B)67.0.
• C)0.67.
• D)0.0067.
• E)negative.

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Definitions:

Consumer Surplus

The difference between the highest price a consumer is willing to pay and the actual price they pay in the market.

Market Demand

The total amount of a product or service that consumers in a market are willing and able to purchase at a given price level in a given time period.

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a good or service and the price they actually pay.

Consumer Surplus

The contrast between the fee consumers are inclined to pay for a good or service and the fee they ultimately pay.