A sharp increase in the price of gasoline
A)will reduce daily gas consumption by more tomorrow than it will six months from now.
B)will reduce gasoline consumption more six months from now than it will tomorrow.
C)will cause an increase in quantity of gasoline demanded if demand is perfectly inelastic.
D)will cause an increase in the quantity of gasoline demanded if demand is perfectly elastic.

Question

Quizplus · Accepted Answer

In the short term, consumers may not have many alternatives to reduce their gasoline consumption. However, in the long run, they may change their behavior by using more fuel-efficient vehicles, carpooling, or taking public transportation. Therefore, the elasticity of demand for gasoline is higher in the long run.

A Sharp Increase in the Price of Gasoline