Suppose gasoline has few close substitutes available. If so, then an increase in the price of gasoline will likely A. decrease the quantity of gasoline demanded by a relatively large amount. B. decrease the quantity of gasoline demanded by a relatively small amount. C. not change the quantity of gasoline demanded. D. increase the quantity of gasoline demanded by a relatively large amount. E. increase the quantity of gasoline demanded by a relatively small amount.

When gasoline has few close substitutes, consumers have limited options to switch to another product when prices rise. As a result, an increase in the price of gasoline will likely cause a relatively small decrease in the quantity demanded because people still need to fuel their vehicles for necessary travel. They may cut back on other discretionary spending instead. Historically, this phenomenon can be traced back to the oil crises of the 1970s when gas prices skyrocketed but people continued to fill up their tanks out of necessity. The lack of alternatives meant that even with higher prices, the demand remained relatively inelastic, leaving consumers with little choice but to pay up.