economics help???? price elasticity?

V

Vineeta

New member
If the price elasticity of demand for gasoline is 0.20,


1. the demand for gasoline is linear.
2. a rise in the price of gasoline will reduce total revenue.
3. a 10 percent rise in the price of gasoline will decrease the amount purchased by 2 percent.
4. a 10 percent fall in the price of gasoline will increase the amount purchased by 20 percent.
 
I would say the demand for gasoline is linear because gasoline is inelastic, despite the price increasing dramatically, people still fill their tanks up. America has a bad public transport system anyway, so people really can't catch a train or bus to work as efficiently. Solar powered and hybrid cars aren't that popular either.

I have provided justifications for my answer, rest is up to you.

Hope it helps!
 
I would say the demand for gasoline is linear because gasoline is inelastic, despite the price increasing dramatically, people still fill their tanks up. America has a bad public transport system anyway, so people really can't catch a train or bus to work as efficiently. Solar powered and hybrid cars aren't that popular either.

I have provided justifications for my answer, rest is up to you.

Hope it helps!
 
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