Question

b. what would happen if the government mandates that crude oil cannot be sold for more than $40 per barrel? would consumers benefit? would businesses benefit? (10 pts) c. is the demand for crude oil inelastic or elastic? explain in detail. (10 pts) d. is the supply of crude oil inelastic or elastic? explain in detail. (10 pts)

Answer 1

(b) consumers would be benefitted.

(c) the demand for crude oil is less elastic

(d) the supply of crude oil is inelastic

(b) The oil sector is primarily impacted by the law of supply and demand, which determines the cost of "black gold."

(c) Given how reliant the world economy is on oil, oil has a low elasticity of demand, which means that the demand for it doesn't move greatly when the price for it changes.

(d) Given how difficult and expensive it is to put up an oil extraction facility in the first place, the supply of oil is also comparatively inelastic.

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