Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?
A)The elasticity coefficient is likely to be very high and supply is inelastic.
B)The elasticity coefficient is likely to be close to zero and supply is perfectly elastic.
C)The elasticity coefficient is likely to be low and supply is highly inelastic.
D)The elasticity coefficient is likely to be low and supply is highly elastic.

Question

Quizplus · Accepted Answer

The fact that bringing oil to the market is a lengthy and expensive process suggests that it is difficult for oil producers to change the quantity of oil supplied quickly in response to changes in price. This indicates low price elasticity of supply, meaning that changes in price will have only a small impact on the quantity of oil supplied. Therefore, Choice C - the elasticity coefficient is likely to be low and supply is highly inelastic - is the best choice.

Bringing Oil to the Market Is a Relatively Long and Costly