A shift of the supply curve of oil raises the price from $60 a barrel to $75 a barrel and reduces the quantity demanded from 40 million to 20 million barrels a day. You can conclude that the
A) demand for oil is elastic.
B) demand for oil is inelastic.
C) supply of oil is elastic.
D) supply of oil is inelastic.

Question

Quizplus · Accepted Answer

The demand for oil is elastic because the percentage change in quantity demanded (50%) is greater than the percentage change in price (25%).

A Shift of the Supply Curve of Oil Raises the Price