Which of the following statements about the consumers' responses to rising gasoline prices is correct?
a. About 10 percent of the long-run reduction in quantity demanded arises because people drive less and about 90 percent arises because they switch to more fuel-efficient cars.
b. About 90 percent of the long-run reduction in quantity demanded arises because people drive less and about 10 percent arises because they switch to more fuel-efficient cars.
c. About half of the long-run reduction in quantity demanded arises because people drive less and about half arises because they switch to more fuel-efficient cars.
d. Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.
c
You might also like to view...
If the price of peaches, a substitute for plums, decreases the demand for plums will increase
Indicate whether the statement is true or false
Marginal revenue is: a. the additional cost incurred from producing one more unit of output. b. the addition to total profit from selling one more unit of output
c. the addition to total revenue from selling one more unit of output. d. the addition to total output from hiring one more unit of labor.