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:

Chemical Agents

Substances that have chemical effects on biological systems, could be therapeutic or toxic.

Disease

A state where an organism's normal functioning is disturbed, typically resulting in specific symptoms and signs.

Treatment

Medical care provided to a patient for an illness or injury, aimed at curing, relieving, or managing symptoms.

One-millionth

A fractional unit representing one part in a million of anything.