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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Many ecologists argue that several species of whales are close to extinction. If this is TRUE, the reason is
A) inadequate enforcement of international laws. B) whales are a type of common property. C) the marginal benefit of hunting and killing a whale is greater than zero. D) whale-killing technology is too productive.
The fact that the United States has a trade deficit means that:
A. foreign countries can have comparative advantages in all goods. B. foreign countries can have comparative advantages in more goods compared to the United States. C. the United States is producing more than it is consuming. D. the United States is lending more to foreign countries than it is borrowing from foreign countries.