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 the tax will generate $1 million in tax revenues per day (I million gallons x S1 per gallon = $1 million). In this stuation, the politician is assuming that the demand for gasoline is:
a. Perfectly elastic
b. Perfectly inelastic
c. Unit elastic
d. Elastic
