Imagine the state of North Carolina decides to increase the gasoline tax. Who will pay for this tax increase in the short run? A. Consumers, because demand for gasoline is elastic. Suppliers, because consumers do not have good substitutes for gasoline. Consumers, because demand for gasoline is inelastic. D. Suppliers, because it is easy to obtain gasoline supplies from other states.

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Casey DurganLv2

20 Aug 2018

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Consider the demand for the gasoline sold by Gas Station G in a large city. The gasoline sold by other stations is an excellent substitute for the gasoline sold by Station G. Because there are many good substitutes for gasoline, its demand is probably elastic.

A. If the price at Gas Station G rises by 10%, by what percentage is its quantity sold likely to change, other things being the same?

B. In this case, what will happen to Station G'S revenues when the price rises?

C. Make a general statement about how revenues will change when the price rises or when it falls if demand is elastic and if it is inelastic.

D. It is often suggested that increasing gasoline taxes will reduce the number of gasoline people will buy and, as a result, reduce air pollution. In the short run would such a policy be effective in reducing air pollution? Would the policy be effective in reducing air pollution in the long run? Why?

roseelk79

Which of the following statements is false?

(A) Consumers with an elastic demand for a service will not bear the burden of a tax if the suppliers of a good have an inelastic supply

(B) Suppliers with an inelastic supply for a service will not bear the burden of a tax if the consumers of a good have an elastic demand

(C) Suppliers with an inelastic demand for a service will bear the budern of a tax if the consumers of a good have a perfectly elastic demand

(D) Consumers with an inelastic demand for as ervice will share the burden of a tax if the suppliers of a good have an inelastic supply

rubymammoth382

Consider some determinants of the price elasticity of demand:

The availability of close substitutes
Whether the good is a necessity or a luxury
How broadly you define the market?
The time horizon being considered

A good without any close substitutes is likely to have relatively ___________(inelastic/elastic) demand since consumers cannot easily switch to a substitute good if the price of the good rises.

A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?

A. Diamond necklace

B. A heart value for heart attack victims

The price elasticity of demand for good also depends on how you define the good.

Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.

Categories	Most Elastic	In Between	Least Elastic
Food
Red Bell Peppers
Vegetables

The price elasticity of demand is also affected by the given time horizon.

If the price of gasoline is relatively high for a long time, consumers are more likely to buy more fuel-efficient cars or switch to alternatives like public transportation. Therefore, the demand for gasoline is__________ (less, more, no more, nor less) elastic in the short run than in the long run.