A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price.If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is
A)elastic.
B)inelastic.
C)unit elastic.
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, then the demand for gasoline is elastic. This means that a small increase in price would lead to a larger decrease in quantity demanded, resulting in a decrease in total revenue. Therefore, the service station owner is right to be concerned that raising the price would result in a worse situation.

A Service Station Owner in Staten Island, New York, Was