In October 2012, the average price of gasoline in Canada was $1.31 per litre and consumers bought 2 percent less gasoline than they had during October 2010, when the average price was $1.25 per litre.Based on these numbers, what was the price elasticity of demand for gasoline from October 2010 to October 2012?
A)-0.43
B)-0.76
C)-2.34
D)-3.84

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. The price increased by 4.8% (from $1.25 to $1.31), and the quantity demanded decreased by 2%. Thus, elasticity = -2% / 4.8% = -0.43.

In October 2012, the Average Price of Gasoline in Canada