Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s).Recall the Application. Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55. If supply decreases by 50 percent, the equilibrium price will increase by:
A. 67 percent.
B. 70 percent.
C. 143 percent.
D. 150 percent.
Answer: A
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The official mission of the World Bank is to
A) establish exchange rates between the currencies of member nations. B) provide funding for needed development projects that would have difficulty attracting private investment. C) advise member nations on the appropriate levels of taxation. D) fight global inflation.
Rising prices erode the value of money as a ________ and as a ________
A) store of value; unit of liquidity B) medium of exchange; store of value C) store of value; unit of barter D) unit of barter; unit of account
If a firm that uses a production process that yields economies of scale charges a price equal to ________, then profit will be ________
A) marginal cost; negative B) marginal revenue; maximized C) marginal cost; maximized D) marginal revenue; positive E) marginal cost; positive
If velocity is constant and equal to 5, a $20 billion shift of the LM curve to the right will be produced by a __________ in the money supply
A) $100 billion increase B) $100 billion decrease C) $4 billion increase D) $4 billion decrease