Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply?

What is the error in the following argument? "An increased sales tax on gasoline won't reduce consumption, because while the higher price will at first reduce demand, the reduced demand will eventually bring the price back down again, and consumption

will return to its former level." A) A higher price doesn't reduce demand. B) A reduced demand does not cause lower prices. C) The tax-induced price increase may be greater than the price reduction due to the lower demand. D) the tax-induced price increase will necessarily be greater than the price reduction due to the lower demand, because demand is never perfectly inelastic. E) The ultimate effect on consumption may be to increase it beyond its original level.

Options on futures contracts are referred to as

A) stock options. B) futures options. C) American options. D) individual options.