Recall the Application About How Changes in Supply Affect the Price

Multiple Choice

Recall the Application about how changes in supply affect the price of gasoline,suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

A) The equilibrium price will increase by 3%.
B) The equilibrium price will decrease by 3%.
C) The equilibrium price will increase by 33.33%.
D) The equilibrium price will decrease by.33.33%