The Elasticity of Demand for Oil Is -0

question 45

Multiple Choice

The elasticity of demand for oil is -0.5 and the elasticity of supply is 0.20. If the demand for oil increases 10 percent, what happens to the price of oil?

• A) It increases by 14 percent.
• B) It decreases by 20 percent.
• C) It increases by 8 percent.
• D) It increases by 40 percent.

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Definitions:

Political Disruptions

are events or actions that cause significant changes or interruptions to the usual political activities and processes, potentially leading to instability.

Common Currency

A currency that is used by multiple countries, facilitating international trade and economic stability, like the Euro in the European Union.

Cross-Border Trade

The buying and selling of goods and services between businesses in neighboring countries or regions.

North American Free Trade Agreement (NAFTA)

A trade agreement between Canada, Mexico, and the United States to reduce trade barriers and increase economic collaboration, replaced by USMCA in 2020.