Suppose the Government Increases the Tax on Gasoline in Order

Multiple Choice

Suppose the government increases the tax on gasoline in order to raise revenue. Since raising the gasoline tax would increase the price of gasoline, the government must be assuming that the:

A) demand for gasoline is price elastic
B) demand for gasoline is price inelastic
C) demand for gasoline is price unit elastic
D) tax on gasoline will not affect the consumption of gasoline