Short-run demand for gasoline is less elastic

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Reference no: EM136003

Q1. Why the short-run demand for gasoline is less elastic than the long-run demand, when the price of gasoline rises, people immediately cut back on unnecessary trips. If the price of gasoline stays high, people eventually replace their cars with more fuel-efficient models?

Q2. Suppose a Japanese firm buys a 1 year treasury bill with a face value of $10,000 today for $9400. If the value of the dollar declined from 90 to 80 yen during the year, what rate of return does the Japanese firm earn on its investment?

Reference no: EM136003

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