The Short-Run Elasticity of Demand for Gasoline Sold at Gasoline

Multiple Choice

The short-run elasticity of demand for gasoline sold at gasoline stations is 0.20. If terrorism causes the supply of gasoline to fall, resulting in a 5 percent drop in quantity, and other things remain the same, the price per gallon will increase by:

A) 4 percent.
B) 5 percent.
C) 20 percent.
D) 25 percent.