The Price Elasticity of Demand for Gasoline in the Short

question 101

Multiple Choice

The price elasticity of demand for gasoline in the short run has been estimated to be -0.1.If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the short run, all other things unchanged?

• A) demand will stay the same, but total expenditures will fall
• B) demand will decrease, but total expenditures will rise
• C) total expenditures will remain unchanged
• D) demand will not change, but total expenditures will rise

---

Definitions:

Flash Floods

Rapid flooding of geomorphologic low-lying areas, caused by heavy rain or other sudden water release.

Total Expenditures

The sum amount of all spending or expenses incurred by an individual or entity within a specific period.

Price Elasticity

How the requirement for a good shifts in relation to changes in its pricing.

Midpoint Method

A technique used to calculate elasticity by taking the average of the initial and final quantities and the initial and final values.