The Supply Curve for Oil Is ________ Because ________

question 4

Multiple Choice

The supply curve for oil is ________ because ________.

• A) elastic; per unit costs do not increase when the quantity supplied increases
• B) elastic; oil exploration and drilling is not expensive relative to revenues earned
• C) inelastic; per-unit costs rise quickly when the quantity supplied increases
• D) inelastic; oil exploration and drilling is not expensive relative to revenues earned

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Definitions:

Actual Sales

This refers to the actual revenue generated from the sale of products or services, as opposed to projected sales or forecasts.

Break-even Point

The point at which total revenues equal total costs, meaning the company neither makes a profit nor incurs a loss.

Variable Costs

Costs that vary directly with the level of production or with volume of services provided.

Fixed Costs

Fixed costs are expenses that do not vary with the level of production or sales within a certain range, such as rent, salaries, and insurance.