Suppose the current price of gasoline at the pump is 4 per


Suppose the current price of gasoline at the pump is $4 per gallon and that one million gallons are sold per month in Texas. A local politician proposes to add a 10-cent tax to the price of a gallon of gasoline, and she claims that the tax will generate $1.2 million in extra tax revenues per year (1 million gallons × 10 cents x 12 months = $1.2 million). What assumption is she making about the elasticity of demand? Is the assumption

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Business Economics: Suppose the current price of gasoline at the pump is 4 per
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