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Question: suppose that the longrun price elasticity of demand for gasoline...

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Suppose that the long-run price elasticity of demand for gasoline is 0.45. Assume that the price of gasoline is currently $4.00 per gallon, the quantity of gasoline is 140 billion gallons per year, and the federal government decides to increase the excise tax on gasoline by $1.00 per gallon. Suppose that in the long run the price of gasoline increases by $0.60 per gallon after the $1.00 excise tax is imposec. a. Using the midpoint formula, after the tax is imposed, the new quantity of gasoline demanded is 130.55 billion gallons per year. Enter your response rounded to two decimal places.) In the long un, the tax reduces the consumption of gasoline bybillion gallons per year. (Enter your response rounded to two decimal places.)

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