At the beginning of this year daily consumption of gasoline

At the beginning of this year, daily consumption of gasoline in the US amounted to 344 million gallons. It is estimated that for every 10% increase in the price of gasoline, quantity demanded falls by 1.80%. By the end of this year, the price of gasoline is expected to increase by 40 cents from $3.05 per gallon. Based on this information, what is the expected quantity demanded for gasoline at the end of this year? Please specify your answer to one decimal place.

Solution

% increase in price of gasoline= 0.4/3.05= 13.11%

So for every 10% increase in price quantity demanded falls by 1.5%

so for 13.11% increase in price quantity will fall by 1.97%

Expected quantity demanded= 344*(1-0.0197)= 337.2 Million