Suppose the Price Elasticity of Demand for Oil Is 0

question 474

Multiple Choice

Suppose the price elasticity of demand for oil is 0.1. In order to lower the price of oil by 20 percent, the quantity of oil supplied must be increased by

• A) 200 percent.
• B) 20 percent.
• C) 2 percent.
• D) 0.2 percent.

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Definitions:

Canadian Dollars

The Canadian dollar is the currency of Canada, often represented by the symbol CAD or simply $.

Lower Terms

Expressing a fraction in its simplest form so that the numerator and denominator are as small as possible.

Ratio

A comparison, by division, of the relative size of two or more quantities.

Proportion

A statement of the equality of two ratios.