Assume you have an AMEX card which pays a 2% cash rebate on all purchases, and a VISA card which pays a 1% cash rebate on all purchases. Gas stations A and B both show a price of $2.00 per gallon, but station A does NOT accept AMEX cards while station B does. How much more expensive is the gas at station A assuming you use your VISA card instead of the AMEX card?

The gas at station A is $0.02 per gallon more expensive

Explanation:

Data provided in the question:

Cash rebate provided by the AMEX card = 2%

Cash rebate provided by the VISA card = 1%

Price of the gas = $2.00 per gallon

Now,

Amount of rebate provided by the AMEX card per gallon = 2% of $2.00

= 0.02 * 2.00

= $0.04

Amount of rebate provided by the VISA card per gallon = 1% of $2.00

= 0.01 * 2.00

= $0.02

Since station A does not accept AMEX card

Therefore, VISA card will be used at station A

Thus,

Rebate at station A = $0.02

And rebate at station B = $0.04

Difference in rebate = $0.04 - $0.02

= $0.02

Hence,

The gas at station A is $0.02 per gallon more expensive