Which of the following statements is correct?
A) Automotive manufacturers prefer stricter fuel economy regulations to higher gasoline taxes.
B) Higher gasoline taxes have provided a market-based incentive for Europeans to buy more fuel-efficient vehicles.
C) Higher gasoline taxes have had no effect on the U.S. demand for gasoline because the demand for gasoline is perfectly inelastic.
D) Fuel efficiency regulations are more effective than gasoline taxes in reducing the demand for gasoline in the United States and Europe.

Question

Quizplus · Accepted Answer

Higher gasoline taxes in Europe have created a market-based incentive for consumers to purchase more fuel-efficient vehicles, which has led to a reduction in overall gasoline consumption. This has been observed through trends such as the higher average fuel efficiency of vehicles sold in Europe compared to the United States. Option A is incorrect because automotive manufacturers generally prefer weaker fuel economy regulations to minimize costs, but may still comply with stricter regulations if they are imposed. Option C is incorrect because demand for gasoline is not perfectly inelastic and can be affected by price changes. Option D is incorrect because fuel efficiency regulations and gasoline taxes can both be effective in reducing gasoline demand, and their effectiveness may vary depending on various factors like consumer behavior and the availability of alternative transportation options.

Which of the Following Statements Is Correct