Question 2 of 11 Incorrect Incorrect Incorrect sapling learning At the beginning

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Question 2 of 11 Incorrect Incorrect Incorrect sapling learning At the beginning of this year, daily consumption of gasoline in the US amounted to 344 million gallons. It is estimated that for every 10% increase in the price of gasoline, quantity demanded falls by 2.20%. By the end of this year, the price of gasoline is expected to increase by 40 cents from $3.05 per gallon Based on this information, what is the expected quantity demanded for gasoline at the end of this year? Please specify your answer to one decimal place Number 335.9 millions of gallons Incorrect. A good starting point for this question is to state the formula for price elasticity of demand. Then piece together all the information available into the formula. Finally, solve for the amount that you are asked to compute Previous Give Up & View Solution Try Again Next Exit

Explanation / Answer

e = % change in Quantity / % change in Price

e = 2.20 / 10 => e = 0.22

e = ( Change in Q / Q ) / (Change in P / P)

0.22 = ( dQ / 344) / ( 0.40 / 3.05)

d Q = 0.22 X 0.131 x 344 = 9.91

Final Q = 344 + 9.91 = > 353.91

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