Why Is the Demand Curve for Oil Rather Inelastic

question 57

Multiple Choice

Why is the demand curve for oil rather inelastic?

• A)There are few widely available good substitutes for oil.(True Answer )Correct
• B)To increase the production of oil requires a significant outlay of exploration and drilling costs.
• C)The world supply of oil is low relative to demand.
• D)The demand curve for oil is always perfectly inelastic.

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Definitions:

Stackelberg Leader

An economic model of strategic interaction between firms in which one firm (the leader) moves first and the others (followers) adapt, leading to a determined outcome based on the leader's decision.

Total Cost Function

The sum of all costs associated with the production of goods or services, including both fixed and variable costs, as a function of output level.

Profit Function

It describes a company's earnings or losses by relating total revenue to total costs, identifying the maximum profit available to a firm.

Price Elasticity

An assessment of the variation in the amount of a product that is either bought or sold, as a reaction to alterations in its cost.