Respuesta :
Answer:
4.545
Explanation:
Given:
Six months ago, the price of gasoline was $2.20 per gallon.
Now, the price is $2.40 per gallon.
In response to this price increase, the number of gallons of gasoline purchased has declined by 2 percent.
Question asked:
Based on this information, what is the absolute price elasticity of demand for gasoline?
Solution:
As we know:
Price elasticity of demand = [tex]\frac{\% change\ in\ quantity\ demanded}{\% change\ in\ price}[/tex]
[tex]\% change\ in\ quantity\ demanded =[/tex] [tex]\frac{new\ value-old \ value}{old\ value} \times100\\[/tex]
[tex]=\frac{2.40-2.20}{2.20} \times100\\\\ =\frac{0.2}{2.20} \times100\\ \\ =\frac{20}{2.20} \\ \\ =9.09[/tex]
[tex]\% change\ in\ price=2[/tex] ( given)
Price elasticity of demand = [tex]\frac{\% change\ in\ quantity\ demanded}{\% change\ in\ price}[/tex]
[tex]=\frac{9.09}{2} \\ \\ =4.545[/tex]
Thus, the absolute price elasticity of demand for gasoline is 4.545
