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Consumption of gasoline

Suppose that the annual personal income per capita is in the US is $39,000 in 2008, the price of gasoline is $4.00/gallon, and the consumption of gasoline per capita is 450 gallons. If per capita personal income is predicted to increase to $40,200 and the price of gasoline increased to $4.30 in 2009, is the per capita consumption of gasoline going to increase or decrease? By how much? Show your calculation steps clearly and prove you claim. Assume the income elasticity of oil is .5 and the price elasticity is -.2

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The income elasticity of oil tells us that for every percentage point change in income will result in a change of half a percentage point in the amount of oil purchased. The price ...

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