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 long-run price elasticity of demand is constant at 0.8.If a tax on gasoline causes the price to rise to $1.50 per litre,then quantity demanded is predicted to fall in the long run by

A) 12% and total expenditure will fall.
B) 24% and total expenditure will fall.
C) 32% and total expenditure will fall.
D) 24% and total expenditure will rise.
E) 50% and total expenditure will rise.