Suppose the price elasticity of demand for oil is 0.3 in the short run and 0.8 in the long run. a) If the price of oil rises from P36.00 to P67.00 per liter, what happens to the quantity of oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b) Why might this elasticity depend on the time horizon?

Suppose the price elasticity of demand for oil is 0.3 in the short run and 0.8 in the long run. a) If the price of oil rises from P36.00 to P67.00 per liter, what happens to the quantity of oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.) b) Why might this elasticity depend on the time horizon?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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