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    Question

    A shift of the supply curve of oil raises the price from

    $10 a barrel to $15 a barrel and reduces the quantity demanded from 40 million to 15 million barrels a day. You can conclude that the
    A demand for oil is elastic Correct Answer Incorrect Answer
    B supply of oil is elastic Correct Answer Incorrect Answer
    C supply of oil is inelastic Correct Answer Incorrect Answer
    D demand for oil is inelastic Correct Answer Incorrect Answer

    Solution

    When percentage change in quantity demanded is greater than the percentage change in own price of commodity, demand is said to be elastic.

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