Studies have fixed the short-run price elasticity of demand


Studies have fixed the? short-run price elasticity of demand for gasoline at the pump atminus-0.20.Suppose that international hostilities lead to a sudden? cut-off of crude oil supplies. As a? result, U.S. supplies of refined gasoline drop 35 percent. If gasoline were selling for? $1.50per gallon before the? cut-off, what new price would you expect to see in the coming? months? (?Hint:Use the absolute value of the gasoline elasticity coefficient and treat all values aspositive.?)

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Business Economics: Studies have fixed the short-run price elasticity of demand
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