Suppose a consumer has the following rule of thumb: Regardless of how gasoline prices fluctuate, she will always buy $20 of gasoline per week and then adjust her driving patterns accordingly.We can then conclude the following:
A)Her own-price elasticity of demand is equal to -1.
B)Her income-elasticity of demand is 0.
C)Her own-price elasticity is 0.
D)Her income elasticity of demand is -1.
E)Both (a) and (b).
F)Both (a) and (d).
G)Both (c) and (d)
H)None of the above.

Question

Suppose a consumer has the following rule of thumb: Regardless of how gasoline prices fluctuate, she will always buy $20 of gasoline per week and then adjust her driving patterns accordingly.We can then conclude the following:
A)Her own-price elasticity of demand is equal to -1.
B)Her income-elasticity of demand is 0.
C)Her own-price elasticity is 0.
D)Her income elasticity of demand is -1.
E)Both (a) and (b).
F)Both (a) and (d).
G)Both (c) and (d) 
H)None of the above.

Quizplus · Accepted Answer

The Answer of Suppose a consumer has the following rule of thumb: Regardless of how gasoline prices fluctuate, she will always buy $20 of gasoline per week and then adjust her driving patterns accordingly.We can then conclude the following:
A)Her own-price elasticity of demand is equal to -1.
B)Her income-elasticity of demand is 0.
C)Her own-price elasticity is 0.
D)Her income elasticity of demand is -1.
E)Both (a) and (b).
F)Both (a) and (d).
G)Both (c) and (d) 
H)None of the above.

Suppose a Consumer Has the Following Rule of Thumb: Regardless