A given change in oil supply will result in a smaller change in the equilibrium price of oil if the
A)price elasticity of demand for oil is higher.
B)price elasticity of demand for oil is lower.
C)income elasticity for oil is higher.
D)income elasticity for oil is lower.
E)demand for oil is not sensitive to the price of oil.

Question

Quizplus · Accepted Answer

When the price elasticity of demand for oil is higher, it means consumers are more responsive to changes in price. Therefore, a change in oil supply will result in a smaller change in the equilibrium price because consumers will adjust their consumption more readily in response to price changes.

A Given Change in Oil Supply Will Result in a Smaller