The price elasticity of demand for gasoline is estimated to be -0.25. If the current price of gasoline is $2.50, what will be the price if there is a shock that reduces quantity supplied by 5%. a. $3.50 O b. $2.625 O c. $2.75 O d. $3

The price elasticity of demand for gasoline is estimated to be -0.25. If the current price of gasoline is $2.50, what will be the price if there is a shock that reduces quantity supplied by 5%. a. $3.50 O b. $2.625 O c. $2.75 O d. $3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The price elasticity of demand for gasoline is estimated to be -0.25. If the current price of gasoline is $2.50, what will be the price if there is a shock that reduces quantity
supplied by 5%.
a. $3.50
b. $2.625
c. $2.75
d. $3

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