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? The elasticity coefficient is likely to be very high, and supply is inelastic. The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic. The elasticity coefficient is likely to be low, and supply is highly elastic. The elasticity coefficient is likely to be low, and supply is highly inelastic.
Question
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?
The elasticity coefficient is likely to be very high, and supply is inelastic.
The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic.
The elasticity coefficient is likely to be low, and supply is highly elastic.
The elasticity coefficient is likely to be low, and supply is highly inelastic.
Solution
The elasticity coefficient is likely to be low, and supply is highly inelastic.
The price elasticity of supply measures how much the quantity supplied responds to changes in the price. If the process of bringing oil to the market is long and costly, it means that producers cannot quickly increase the quantity supplied when the price increases, or decrease the quantity supplied when the price decreases. This indicates that the supply of oil is inelastic, and the elasticity coefficient is likely to be low.
Similar Questions
Read the Market for Oil article. (You can find it under the Tutorial heading in the Week 3 tab.) Consider the following questions for discussion in your tutorial.Identify the stakeholders in the market for oil and categories them into primary and secondary stakeholders.Illustrate the effect of a cut down in oil production on the market for Petrol.Is the price elasticity of (worldwide) demand for oil likely to be relatively elastic or inelastic? Why?Is the price elasticity of (worldwide) supply for oil likely to be relatively elastic or inelastic? Why?Given the numbers in the Bartholomeusz article and your answers to the previous questions, is Russia's move likely to increase its oil revenues? How does your answer depend on the answers to questions 3 and 4?
The factors that affect the price elasticity of supply include: Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. check all that applyrelative need and relative cost.time needed to adjust to changes in price.the availability of inputs.the flexibility of the production process.degree of necessity.
Price elasticity of supply is when the elasticity of either supply is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in price.Question 1Select one:a.Trueb.False
the price elasticity of supply is A. Perfectly inelastic B. Elastic C. Unitary D. Inelastic E. Perfectly elastic
The price elasticity of supply is defined as:(a) % change in quantity supplied divided by the % change in price;(b) % change in price divided by the % change in quantity supplied;(c) % change in quantity supplied divided by the % change in income;(d) % change in income divided by the % change in quantity supplied
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