Topic: Is it time for the United States to raise gasolines taxes? (environmental economics)
1. Economists have calculated that a demand elasticity of gasoline of 0.06 percent in 2005. Has the demand elasticity of gasoline changed in the last 13 years? Please take into account the following when answering this question.
1) consumers react differently to temporary price spikes to permanent price spikes.
2) car companies discount big cars when gasoline prices increase.
3) the household budget devoted to gasoline falls as income increases.
2. Fuel efficiency standards and gasoline taxes are not mutually exclusive. How does this statement change your answer to question #1?
Accurate answers please