If the demand for gasoline becomes more elastic over time,
A)the demand curve will shift out.
B)the demand curve will become flatter.
C)other things being equal, the equilibrium price of gasoline must fall.
D)other things being equal, the equilibrium quantity of gasoline must fall.

Question

Quizplus · Accepted Answer

If demand for gasoline becomes more elastic, it means that consumers are more responsive to changes in price, leading to a flatter demand curve. As a result, price elasticity of demand will increase, which means that a smaller change in price will result in a larger change in quantity demanded. This will put pressure on gasoline suppliers to lower their prices in order to maintain or increase their market share, so the equilibrium price of gasoline must fall. However, it is not necessarily implied that the demand curve will shift out or that the equilibrium quantity of gasoline will fall.

If the Demand for Gasoline Becomes More Elastic Over Time