This topic contains a solution. Click here to go to the answer

Author Question: Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is ... (Read 122 times)

pragya sharda

  • Hero Member
  • *****
  • Posts: 566
Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the govenment increases the federal gasoline tax?
 
  A) Consumer expenditures on gasoline increase over the short run and long run
  B) Consumer expenditures on gasoline decline over the short run and increase over the long run
  C) Consumer expenditures on gasoline increase over the short run and decline over the long run
  D) Consumer expenditures on gasoline decrease over the short run and long run

Question 2

A few years ago, the city of Seattle, Washington, considered imposing a specific tax on all espresso-based coffee drinks sold in the city. The extra tax revenue generated would have been used to fund after-school programs for low-income children.
 
  The coffee-house owners (firms) agreed that this would be a good program to fund, but they argued that the tax would sharply reduce their sales volume and they would pay most of the tax burden. This claim is true if: A) the demand for espresso-based coffee is more inelastic than supply.
  B) the demand for espresso-based coffee is more elastic than supply.
  C) there are no close substitutes for espresso-based coffee drinks.
  D) espresso-based coffee drinks can be produced at constant marginal cost.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

batool

  • Sr. Member
  • ****
  • Posts: 320
Answer to Question 1

C

Answer to Question 2

B




pragya sharda

  • Member
  • Posts: 566
Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review


atrochim

  • Member
  • Posts: 331
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Did you know?

Opium has influenced much of the world's most popular literature. The following authors were all opium users, of varying degrees: Lewis Carroll, Charles, Dickens, Arthur Conan Doyle, and Oscar Wilde.

Did you know?

It is difficult to obtain enough calcium without consuming milk or other dairy foods.

Did you know?

More than 4.4billion prescriptions were dispensed within the United States in 2016.

For a complete list of videos, visit our video library