The Price Elasticity of Demand for Gasoline Is 0

question 136

Multiple Choice

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

• A) a decrease of more than 20 percent in the quantity of gasoline demanded.
• B) an increase in the total revenue received from the sale of gasoline.
• C) a loss of total revenue for gasoline producers, because at a higher price the quantity of gasoline demanded decreases.
• D) no change in the quantity of gasoline sold because people need gasoline.

---

Definitions:

Denseness

In mathematics, it describes a property of a set in which every point in a given space is a limit point of some sequence in the set.

Residual Plot

A graphical representation showing the residuals (the differences between observed and predicted values) on the vertical axis and the independent variable or predicted values on the horizontal axis, used to assess model fit.

Explanatory Variable

A variable in statistical analysis that is believed to influence or cause changes in another variable, often tested for effect.

Regression Analysis

A set of statistical processes for estimating the relationships between a dependent variable and one or more independent variables.