The Extra Nine-Tenths of a Cent at the Pump
Drive past a gas station and the sign may read $3.499 per gallon. That strange last digit is a tenth of a cent, a piece of money that no coin can pay, so how does anyone settle a bill that includes it? The answer is rounding, and the numbers show how little the extra piece actually matters.
Suppose a driver pumps 8 gallons. The pump multiplies 8 by $3.499 and gets $27.992, but money is paid in whole cents, so the amount is rounded to the nearest cent. The digit after the cents place is a 2, which is less than 5, so the total rounds down to $27.99. With 12 gallons, the product is $41.988. This time the next digit is an 8, so the cents round up, and the bill becomes $41.99.
Compare that with a sign that simply said $3.50. Twelve gallons at $3.50 would cost exactly $42.00, which is only one cent more than the real bill. A tenth of a cent per gallon is a tiny amount, and it accumulates to about a penny for every ten gallons that a customer buys.
If the difference is so small, why bother with it? Researchers who study shopping behavior have found that people tend to pay the most attention to the leftmost digits of a price. A sign showing $3.499 looks like a price in the three-forty range, even though it is nearly $3.50. Understanding rounding lets a driver see through that effect and compare stations by the real cost of filling a tank.