Question

The price elasticity of demand for gasoline in the short run has been estimated to be -0.1. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the short run, all other things unchanged?

demand will stay the same, but total expenditures will fall
demand will decrease, but total expenditures will rise
total expenditures will remain unchanged
demand will not change, but total expenditures will rise

Answer 1

demand will not change, but total expenditures will rise

Step-by-step explanation:

there wont be any changes in consumption quantity but lesser oil will make gasoline more expensive and therefore not changing the demand but making the total expenditures to increase.