Answer:
The demand for gasoline was inelastic.
Explanation:
In May 2011, the average price of gasoline in the United States was $3.76 per gallon.
During May 2010, when the average price of gasoline was $2.79 per gallon.
In May 2011, the consumers purchased 5 percent less gasoline.
Percentage change in price
= [tex]\frac{3.76 - 2.79}{2.79}\ \times\ 100[/tex]
= 34.76%
Price elasticity of demand
= [tex]\frac{\% \Delta Q}{\% \Delta P}[/tex]
= [tex]\frac{5}{34.76}[/tex]
= 0.14
Since, the price elasticity is less than 1, it implies that demand was inelastic.
