The average price of gasoline in June of 2008 in the United States was $3.79 . This was up by 82 cents from the previous year. Forecasters are expecting a drop in gasoline consumption of about 1% for the first time in 16 years
Even though this is a historic moment what do the figures still demonstrate about the elasticity of demand for gasoline? If the price increases go unabated what is likely to happen to the long-run price elasticity for gasoline and why?
The increase in the price in percentage terms is about 26%. A drop in consumption of only 1% still implies that gasoline is price inelastic. If prices for gasoline continue to rise unabated it is very likely that in the long run people will gradually flock to alternative forms of fuel or transportation. Economy cars will become more popular, more people will turn to mass transit and still others may car pool, bike or walk to work where feasible.
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Economists measure the "openness" of an economy in terms of
A) its immigration policies. B) how often it holds free elections. C) the percentage of foreign-born workers in its labor force. D) how much it trades with other economies.
Macroeconomic topics do not usually include: a. the rate of inflation
b. the rate of unemployment. c. economic growth. d. the profit maximizing decisions of an individual firm.
How much trade involves shipping goods between the fairly similar high-income economies of the United States, Canada, the European Union, Japan, Mexico, and China?
a. Roughly one-fourth b. Roughly one-third c. Roughly one-half d. Roughly one-fifth
Protectionism may reduce imports, and it will also
A. appreciate the dollar, reducing exports. B. appreciate the dollar, increasing exports. C. depreciate the dollar, increasing exports. D. depreciate the dollar, reducing exports.