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If a 10% increase in gasoline prices occurs reducing gasoline consumption by about 6%, a.) the...

Question:

If a 10% increase in gasoline prices occurs reducing gasoline consumption by about 6%,

a.) the price elasticity of demand is 60%.

b.) the price elasticity of demand is 0.6.

c.) the price elasticity of demand is 0.04.

d.) the price elasticity of demand is 1.67.

The Price Elasticity of Demand:

The law of demand explains the inverse relationship between the quantity demanded and the price. The price elasticity of demand explains by how much the quantity demanded of a product changes by when its own price changes.

Answer and Explanation: 1

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  • The crrect answer is: b.) the price elasticity of demand is 0.6

The price elasticity of demand is computed using the formula:

$$\begin{align} E_d&...

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Price Elasticity of Demand: Definition, Formula & Example

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Chapter 3 / Lesson 54
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Learn what price elasticity is. Discover how to find price elasticity of demand, study examples of price elasticity, and examine a price elasticity graph.


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