Prove that price elasticity of demand is not the same as the slope of a demand curve. Suppose the current price of gasoline at the pump is $4 per gallon and that 1 million gallons are sold per day. A...

Prove that price elasticity of demand is not the same as the slope of a demand curve. Suppose the current price of gasoline at the pump is $4 per gallon and that 1 million gallons are sold per day. A politician proposes to add a $1 tax to the price of a gallon of gasoline. She says that the tax will generate $1 million in tax revenues per day. What assumption is she making?

May 18, 2022
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