If “green” gasoline were sold for 20 cents per gallon more than “dirty” gasoline, would you...
If “green” gasoline were sold for 20 cents per gallon more than “dirty” gasoline, would you buy it? How much of a premium per gallon do you think most people would pay?
Homework Answers
20 cents is quite an insignificant amount to be paid for saving the environment from pollution. Thus I would definitely buy green gasoline if it is sold for 20 cents per gallon more than dirty gasoline. As most of the people are getting eco-friendly, so they would be ready to pay certain small amount extra for green gasoline compared to dirty gasoline.
As the gasoline has got inelastic demand, that is the change in price to a small extent does not affect the demand of gasoline much , so people would be ready to pay 40 cents more for a premium per gallon being showing their responsibility towards the environment and eco-friendliness.
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