Suppose You Are Advising the Government on Changes in the Gasoline

question 80

Multiple Choice

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Short-run price elasticity of demand is constant at 0.3.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the short run by

• A)15%,and total expenditure will rise.
• B)15%,and total expenditure will fall.
• C)50%,and total expenditure will fall.
• D)12%,and total expenditure will rise.
• E)13.3%,and total expenditure will rise.

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Definitions:

Normally Distributed

Describes a statistical distribution where data points are symmetrical, with most of the observations clustering around the mean and fewer and fewer occurring as they move away from the center.

Shifting Values

Refers to altering the numerical or categorical data points in a dataset, leading to changes in analysis outcomes.

σ

The symbol for standard deviation, a measure of the amount of variation or dispersion of a set of values.

Normal Distribution

A symmetric probability distribution centered on the mean, demonstrating that occurrences near the mean happen more often than those far from it.