A Sharp Increase in the Price of Gasoline

question 213

Multiple Choice

A sharp increase in the price of gasoline

• A)will reduce daily gas consumption by more tomorrow than it will six months from now.
• B)will reduce gasoline consumption more six months from now than it will tomorrow.
• C)will cause an increase in quantity of gasoline demanded if demand is perfectly inelastic.
• D)will cause an increase in the quantity of gasoline demanded if demand is perfectly elastic.

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Definitions:

Unit Variable Cost

The variable cost associated with the production of one unit of a product or service.

Total Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Average Operating Assets

The average value of assets used in the production process or in generating sales, calculated over a specific period.

Margin

Net operating income divided by sales.