If the Elasticity of Demand for Oil Is 0

question 64

Multiple Choice

If the elasticity of demand for oil is 0.5 and the elasticity of supply for oil is 0.3, then a 1 percent increase in the supply of oil would cause the price of oil to:

• A) increase by 1.25 percent.
• B) increase by 2.50 percent.
• C) decrease by 1.25 percent.
• D) decrease by 2.50 percent.

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Definitions:

Henry Ford

An American industrialist and founder of the Ford Motor Company, known for revolutionizing the automobile industry with assembly line production.

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The United Nations Educational, Scientific and Cultural Organization, a specialized agency aimed at promoting world peace and security through international cooperation in education, the arts, sciences, and culture.

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