Suppose the Price of Gasoline Is $3

question 39

Multiple Choice

Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is 150 billion gallons per year, the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon, which increases the price of gasoline by $0.75 per gallon.How much revenue does the federal government receive from the tax?

• A)$95.44 billion
• B)$111.20 billion
• C)$148.27 billion
• D)$161.61 billion

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Definitions:

Serosal Lining

A smooth membrane consisting of a layer of cells which secrete serous fluid, covering internal organs and cavities.

Mucosal Lining

The moist, protective tissue lining various organs and body cavities, such as the mouth, nose, and digestive tract.

Alimentary Canal

The whole passage along which food passes through the body from mouth to anus, including the esophagus, stomach, and intestines.

Esophagus

A muscular tube that conveys food from the pharynx to the stomach.