When Joe's Gas Raises Its Prices for Regular Unleaded,total Revenue

question 121

Multiple Choice

When Joe's Gas raises its prices for regular unleaded,total revenue from both regular unleaded falls to zero.It must be the case that:

• A)the demand for Joe's regular unleaded gasoline is perfectly elastic.
• B)the demand for regular unleaded must be inelastic.
• C)there are NOT many good substitutes for regular unleaded gasoline.
• D)consumers are switching to premium grades of gasoline.

---

Definitions:

Exact Value

The precise numerical quantity or measurement without approximation.

Estimate

To make an approximate judgment or calculation of the value, number, quantity, or extent of something.

Winner's Curse

A phenomenon that occurs in auctions where the winning bidder pays more than what the item is actually worth, usually because of incomplete information or misjudgment.

Common-value Auction

an auction format where the item for sale is of the same value to all bidders, but the bidders have different information about the item's actual value.