Most worldwide studies show that, on average, when the price of petrol rises by 10 per cent, the quantity of petrol purchased falls by 2.5 per cent. In the case of Australia, however, the following data was observed in Table B (below).

a)Calculate the coefficient for the price elasticity of demand for petrol worldwide. 1 mark.

b)Calculate the coefficient for the price elasticity of demand for petrol in the Australian case. 1 mark.

c)What must you assume using the Australian data if this is to be an accurate measure of Australia's price elasticity of demand for petrol? 1 mark.

TABLE B

Price Sales (billions litres)

$ 1.40 30

$ 1.20 31