Current average gasoline prices in the U.S. are about $2.26/gallon. A year ago, they were about...

Current average gasoline prices in the U.S. are about $2.26/gallon. A year ago, they were about $2.69/gallon. This represents a price decrease over the last year of about 17%. If the own price elasticity of gasoline is -0.2%, by what percentage would you expect the quantity demanded to change over this period?

Solutions

Expert Solution

Answer - Elasticity of demand = % change in quantity demanded / % change in price

% change in price = 17% (fall)

Elasticity = -0.2

% change in quantity = 17 * 0.2

= 3.4 %

Hence , as a result of fall in price of gasoline , the demand will rise by about 3.4%.

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Oil and Gas Prices The average gasoline price per gallon (in cities) and the cost of...

Oil and Gas Prices The average gasoline price per gallon (in cities) and the cost of a barrel of oil are shown below for a random selection of weeks in 2015 . Oil ( $ ) Gasoline ( $ ) 55.78 2.654 41.96 2.269 52.08 2.445 57.28 2.710 58.15 2.805 67.59 3.071 The correlation coefficient for the data is =r0.978 and =α0.01 . Should regression analysis be done? The regression analysis should not be done. The regression analysis should be...

Oil and Gas Prices The average gasoline price per gallon (in cities) and the cost of...

Oil and Gas Prices The average gasoline price per gallon (in cities) and the cost of a barrel of oil are shown below for a random selection of weeks from 2015. Oil $47.79 $44.62 $81.08 $43.67 $40.58 $48.64 Gasoline 2.638 2.636 2.944 2.528 2.623 2.682 1) The correlation coefficient for the data is r = 0.951 and a = 0.01. Should regression analysis be done? a) The regression analysis should not be done or b) The regression analysis should be...

The average price for a gallon of gasoline in the United States is 3.75 and in...

The average price for a gallon of gasoline in the United States is 3.75 and in Russia it is 3.37. Assume these averages are the population means in the two countries and that the probability distributions are normally distributed with a standard deviation of .25 in the United States and a standard deviation of .20 in Russia. a. What is the probability that a randomly selected gas station in the United States charges less than ________ per gallon (to 4...

The average price for a gallon of gasoline in the United States is $3.74 and in...

The average price for a gallon of gasoline in the United States is $3.74 and in Russia it is $3.4. Assume these averages are the population means in the two countries and that the probability distributions are normally distributed with a standard deviation of $0.25 in the United States and a standard deviation of $0.20 in Russia. a. What is the probability that a randomly selected gas station in the United States charges less than $3.65 per gallon (to 4...

Regular gasoline averaged $2.83 per gallon in December 2018. Assume the standard deviation for gasoline prices...

Regular gasoline averaged $2.83 per gallon in December 2018. Assume the standard deviation for gasoline prices is $0.14 per gallon. A random sample of 40 service stations was selected. Complete parts a through d. a. What is the probability that the sample mean will be less than $2.84? The probability that the sample mean will be less than $2.84 is ______ (Type an integer or decimal rounded to four decimal places as needed.) b. What is the probability that the...

In estimating the average price of a gallon of gasoline in a region we plan to...

In estimating the average price of a gallon of gasoline in a region we plan to select a random sample (independent and identically distributed) of size 10. Let X1 , X2 , ... , X10 denote the selected sample. The four estimators for estimating the average price, mu, are: U1 = ( X1 + X2 + ... + X10 ) /10 U2 = ( X1 + X2 + ... + X8 ) /8 + X10 - X9 U3 = (...

The average price of a gallon of unleaded regular gasoline was reported to be $3.44 in...

The average price of a gallon of unleaded regular gasoline was reported to be $3.44 in northern Kentucky. Use this price as the population mean, and assume the population standard deviation is $0.30. What is the probability that the mean price for a sample of 50 service stations is within ±$.06 of the population mean? What is the probability that the mean price for a sample of 100 service stations is within ±$.06 of the population mean? The Wall Street...

In estimating the average price of a gallon of gasoline in a region we plan to...

In estimating the average price of a gallon of gasoline in a region we plan to select a random sample (independent and identically distributed) of size 10. Let X1, X2, ... , X10 denote the selected sample. The two estimators for estimating the average price, μ, are: U1 = (X1 + X2 + X3 + X4 + X5 + X6 + X7 + X8 +X9 + X10)/10 U2 = (X1 + X2 + X3 + X4 + X5 + X6...

In estimating the average price of a gallon of gasoline in a region we plan to...

In estimating the average price of a gallon of gasoline in a region we plan to select a random sample (independent and identically distributed) of size 10. Let X1, X2, ... , X10 denote the selected sample. The two estimators for estimating the average price, μ , are: U1 = (X1 + X2 + X3 + X4 + X5 + X6 + X7 + X8 +X9 + X10)/10 U2 = (X1 + X2 + X3 + X4 + X5 +...

Subjects