Recall the Application About How Changes in Supply Affect the Price

question 105

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 decreases by 50 percent, the equilibrium price will increase by

• A) 67 percent.
• B) 70 percent.
• C) 143 percent.
• D) 150 percent.

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