A Shift of the Supply Curve of Oil Raises the Price

question 119

Multiple Choice

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

• A) demand for oil is elastic.
• B) demand for oil is inelastic.
• C) supply of oil is elastic.
• D) supply of oil is inelastic.

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Definitions:

Annual Interest

The amount of interest due over the course of a year on borrowed capital or invested funds.

Accounting Profits

The difference between a company's total revenue and its explicit costs, not including opportunity costs.

Savings Account

A deposit account held at a bank or financial institution that pays interest but typically has limited transactions.

Loan

Borrowed money that is expected to be paid back with interest to the lender, according to agreed terms and conditions.