Think about what might be substitute for the gasoline

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When a product has a relatively inelastic demand, a 10% rise in price would cause a decline in quantity demanded that is smaller in absolute value: for example, 8%. If the demand for a product were perfectly inelastic, a rise in price would have no effect on demand at all. For example, a 10% rise in price would cause a 0% decline in quantity. The demand curve for the product would be completely vertical.

gasoline could consumers adjust to a rise in the product's price? Decide whether you think the gasoline has perfectly inelastic demand. To say it another way, decide whether you think the demand curve will be vertical, or just steep?

Think about what might be a substitute for the gasoline. Be creative, realize that some substitutes are quite like the product they replace (tea is a hot beverage containing caffeine), but some are not (a letter might substitute for a telephone call).

Reference no: EM131244514

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