Recall the Application About How Changes in Supply Affect the Price

question 65

Multiple Choice

Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s) .
-Recall the Application.Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55.If supply increases by 40 percent,the equilibrium price will decrease by

• A) 54 percent.
• B) 72 percent.
• C) 114 percent.
• D) 188 percent.

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Definitions:

Exponentiation

The mathematical operation involving the raising of one number to the power of another.

Division

A mathematics operation where a number is divided into parts or segments, represented by the division sign (/ or ÷).

Division

A fundamental mathematical operation that represents the process of dividing one number by another.

Exponentiation

A mathematical operation involving the raising of a base to the power of an exponent, symbolizing repeated multiplication.