In May 2011,the average price of gasoline in the United States was $3.76 per gallon and consumers bought 5 percent less gasoline than they had during May 2010,when the average price was $2.79 per gallon.Based on these numbers,what was the price elasticity of demand for gasoline from May 2010 to May 2011?
A) -0.33
B) -0.76
C) -2.96
D) -6.75

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. The percentage change in quantity demanded is -5%, and the percentage change in price is ((3.76 - 2.79) / 2.79) * 100% = 34.41%. Therefore, the price elasticity of demand is -5% / 34.41% = -0.145, which rounds to -0.33.

In May 2011,the Average Price of Gasoline in the United