In December 2014, the Average Price of Gasoline in the United

question 13

Multiple Choice

In December 2014, the average price of gasoline in the United States was $2.50 per gallon and consumers bought 7 percent more gasoline than they had during April 2014, when the average price was $3.60 per gallon.Based on these numbers, what was the price elasticity of demand for gasoline from April 2014 to December 2014?

• A)-0.02
• B)-0.19
• C)-1.01
• D)-2.26

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Definitions:

Long-run

A time period in which all factors of production, including capital, are variable, allowing full industry adjustment.

Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based on factors other than the cost of production.

Price Searchers

Sellers who have the ability to control and set prices because their products do not have perfect substitutes.