If a one percent change in the price of oil causes a 0.02 percent change in the quantity demanded of oil,then 0.02 is the
A) price elasticity of demand.
B) price elasticity of supply.
C) cross-price elasticity of demand.
D) income elasticity of demand.

Question

Quizplus · Accepted Answer

The given scenario describes the elasticity of demand, which measures the responsiveness of the quantity demanded to a change in price. The formula for price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. In this case, a 1% change in price causes a 0.02% change in quantity demanded, resulting in a price elasticity of demand of 0.02/1 = 0.02. Therefore, the correct answer is A.

If a One Percent Change in the Price of Oil