1.The Grip of Gas
U.S. drivers are ranked as the least sensitive to changes in the price of gasoline. For example, if the price rose from $3 to $4 per gallon and stayed there for a year U.S. purchases of gasoline would fall only about 5 percent. Source: Slate, September 27, 2005 Calculate the price elasticity of demand for gasoline. Is the demand for gasoline elastic, unit elastic, or inelastic? Explain how the price rise from $3 to $4 a gallon changes the total revenue from gasoline sales.
1.The Grip of Gas U.S. drivers are ranked as the least sensitive to changes in the price of gasoline. For example, if the price rose from $3 to $4 per gallon and stayed there for a year U.S. purchases of gasoline would fall only about 5 percent. Source: Slate, September 27, 2005 Calculate the price elasticity of demand for gasoline. Is the demand for gasoline elastic, unit elastic, or inelastic? Explain how the price rise from $3 to $4 a gallon changes the total revenue from gasoline sales.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1.The Grip of Gas
U.S. drivers are ranked as the least sensitive to changes in the price of gasoline. For example, if the price rose from $3 to $4 per gallon and stayed there for a year U.S. purchases of gasoline would fall only about 5 percent.
Source: Slate, September 27, 2005
Calculate the price elasticity of demand for gasoline. Is the demand for gasoline elastic, unit elastic, or inelastic?
Explain how the price rise from $3 to $4 a gallon changes the total revenue from gasoline sales.
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