If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals
A) 1.1.
B) 1.0.
C) 0.9.
D) Total revenue would increase at all of the above elasticities.
A
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An economic system in which the government decides what, how, and for whom to produce, directs workers to jobs, and owns all the land and capital is
A) centrally planned socialism. B) market capitalism. C) mixed economy. D) supported by economists as the best system available.
Suppose the Fed cares only about keeping the economy close to full-employment output
The Fed can target the real money supply (thus keeping the LM curve fixed) or it can target the real interest rate, changing the money supply and shifting the LM curve however is necessary to prevent a change in the real interest rate. (a) Which is the best policy if the main shocks to the economy are shocks to the IS curve? Explain why. Illustrate with a diagram. (b) Which is the best policy if the main shocks to the economy are shocks to real money demand? Explain why. Illustrate with a diagram.