Suppose the Price of Gasoline Is $3

Multiple Choice

Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is 150 billion gallons per year, the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon, which increases the price of gasoline by $0.75 per gallon.How much revenue does the federal government receive from the tax?

A) $95.44 billion
B) $111.20 billion
C) $148.27 billion
D) $161.61 billion