15. The government is considering an increase in the tax on gasoline. They know that the own-price elasticity of demand for gas is .25. The current price is $1.00 per gallon. They are willing to allow the quantity of gas sold to fall by 10%. What tax increase (in cents per gallon) would lead to a 10% reduction in quantity demanded? (we assume that the entire tax shows up in the price at the pump)
  1. .04
  2. .10
  3. .25
  4. .29
  5. .40

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