Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Long-run price elasticity of demand is constant at 0.8.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the long run by
A)12%,and total expenditure will fall.
B)32%,and total expenditure will rise.
C)15%,and total expenditure will rise.
D)15%,and total expenditure will fall.
E)50%,and total expenditure will rise.

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The Answer of Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Long-run price elasticity of demand is constant at 0.8.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the long run by
A)12%,and total expenditure will fall.
B)32%,and total expenditure will rise.
C)15%,and total expenditure will rise.
D)15%,and total expenditure will fall.
E)50%,and total expenditure will rise.

Suppose You Are Advising the Government on Changes in the Gasoline