Suppose You Are Advising the Government on Changes in the Gasoline

Multiple Choice

Suppose you are advising the government on changes in the gasoline market.The current price is $1.00 per litre and the quantity demanded is 2.5 million litres per day.Long- run price elasticity of demand is constant at 0.8.If the supply of gasoline is reduced so that the price rises to $1.50 per litre,then quantity demanded is predicted to fall in the long run by

A) 15%,and total expenditure will fall.
B) 12%,and total expenditure will fall.
C) 32%,and total expenditure will rise.
D) 50%,and total expenditure will rise.
E) 15%,and total expenditure will rise.