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1. Suppose the price of gasoline rises from $1.89 to 2.17 per gallon, and in response, the quantity demanded decreases from 20,000 to 18,000 gallons.

a. What is the price elasticity of demand?

b. Is demand elastic or inelastic within this range?

c. What is the change in total revenue? Does this make sense?

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

For each of the following cases, calculate the arc price elasticity of demand and state Wethersfield demand is elastic, inelastic or unit elastic
a) When the price of milk increases for $2.25 to $2.50 per gallon, the quantity demand falls from 100 gallons 5o 90 gallons
b) When the price of paperback books falls from $7.00- $6.50 the quantity demand rises from 100 to 150
c) When the rent on apartments rises from $500 to $550, the quantity demanded decreases from 1,000 to 950

1. In each case below, what is the value of the price elasticity of demand? Is demand perfectly inelastic, inelastic, unit elastic, elastic or perfectly elastic?

a. Price falls by 10%, quantity demanded rises by 8%

b. Price rises by 3%, quantity demanded falls by 3%

c. Price rises by 1%, quantity demanded falls by 5%

d. Price rises by 5%, quantity demanded collapses to zero

e. Price falls by 2%, quantity demanded does not change

Suppose that market price of gas increases from $2 to $3 per gallon and quantity demanded for this good falls from 24 to 18 gallons per week. Calculate price elasticity of demand and interpret the result.

Suppose that weekly income of a household decreases from $1,200 to $1,000 and quantity demanded for gas falls from 18 to 14 gallons per week. Calculate income elasticity of demand and interpret the result.

Suppose that market price of diesel fuel falls from $5 to $3 per gallon and afterwards weekly quantity demanded for gas decreases from 18 to 16 gallons per week. Calculate cross-price elasticity of demand for gas and interpret the result.

Suppose that market price of gas increases from $4 to $5 per gallon and quantity supplied for this good increases from 13 to 17 gallons per single car weekly. Calculate price elasticity of supply and interpret the result.

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