Answer (B) is correct . An increase in gasoline prices during the summer implies that demand for gasoline is relatively price inelastic in the short run. That is, the price increase will result in little or no decline in the amount demanded, and total revenues will increase.
Answer (A) is incorrect because If demand is price elastic, the quantity demanded will decline by a greater percentage than the percentage price increase.
Answer (C) is incorrect because The distinction between inferior and normal goods is based on the effects on quantity demanded of a change in income.
Answer (D) is incorrect because Perfect inelasticity means there would be no decline in demand because of a price increase.
|
