3. Problems and Applications Q3

Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.

If the price of heating oil rises from $1.20 to $1.80 per gallon, the quantity of heating oil demanded will___ by % in the short run and by % in the long run. The change is____in the long run because people can respond___easily to the change in the price of heating oil.

fall

rise

larger smaller

less

more