Suppose the Price Elasticity of Supply for Crude Oil Is

question 25

Multiple Choice

Suppose the price elasticity of supply for crude oil is 2.5. How much would price have to rise to increase production by 20 percent?

• A)8 percent
• B)12.5 percent
• C)20 percent
• D)45 percent

---

Definitions:

Price Elasticity

A measure of how much the demand or supply of a product changes in response to a price change.

Cournot Equilibrium

A model of market competition in which firms choose their output levels simultaneously and independently to maximize profit with the assumption of no further entry by other firms.

Marginal Cost

Marginal cost denotes the change in the total expense incurred by a firm when its output is increased by a single unit.

Major League Baseball

A professional baseball organization consisting of teams in the United States and Canada, representing the sport's highest level of play.