Purchase Solution

Consumption of gasoline

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution

Solution Summary

The following posting helps with a problem regarding the consumption of gasoline.

Solution Preview

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 ...

Purchase this Solution


Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.