question archive If the price of gasoline rises, buyers will probably A
If the price of gasoline rises, buyers will probably A
Subject:EconomicsPrice:2.88 Bought3
If the price of gasoline rises, buyers will probably
A. spend more on gasoline since the supply for gasoline is probably elastic.
B. spend less on gasoline since the supply for gasoline is probably inelastic.
C. spend more on gasoline since the demand for gasoline is probably inelastic.
D. spend less on gasoline since the demand for gasoline is probably elastic.
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The correct answer is C. spend more on gasoline since the demand for gasoline is probably inelastic.
We expect the demand for gasoline to be relatively inelastic. So when prices go up, the percentage increase in price is higher than the percentage decrease in demand. This means that the increase in expenditure due to higher prices is higher than the decrease in expenditure due to lower demand. Overall, this has a positive impact on total expenditure and increases total expenditure.
