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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Two drivers, Walt and Jessie, each drive up to a gas station. Before looking at the price, each places an order. Walt say’s, “I’d like 10 gallons of gas.” Jessie says, “I’d like $10 worth of gas.” What is each driver’s price elasticity of demand?

To determine
Perfectly inelastic and unit elasticity of demand.

Explanation

For Walt, there is no change in the quantity demanded even if there is a change in the price. So for Walt, the price elasticity of demand is zero...

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