In October 2012, the Average Price of Gasoline in Canada

question 113

Multiple Choice

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

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Definitions:

Price Ratio

The ratio of the prices of two goods or services, often used in the context of trade or barter.

Elasticity of Demand

A measure of how responsive the quantity demanded is to a change in price, indicating how a product's demand will fluctuate with pricing changes.

Marginal Rate

Often refers to the incremental increase in cost or benefit associated with a one-unit change in an economic activity.

Substitution

The economic principle where consumers replace more expensive items with less costly alternatives, or when firms swap higher-priced inputs with cheaper resources.