Statement I: in the Very Short Run,the Demand for Gasoline

question 123

Multiple Choice

Statement I: In the very short run,the demand for gasoline and home heating oil is almost perfectly inelastic.
Statement II: When American consumers traded in their gas-guzzler automobiles for Japanese fuel-efficient cars from the mid-1970s to the mid 1980s,this was an example of how the demand for gasoline had become more elastic in the long run.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Economies Of Scope

Cost advantages that enterprises obtain by producing a wide variety of products, rather than specializing in the production of a single product or a very few products.

Economies Of Scale

A situation where the cost per unit of output decreases as the scale of production increases.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Diseconomies Of Scope

A situation where the cost of producing multiple products or services together is higher than producing them separately.