Question

The price elasticity of demand in the United States for crude oil has been estimated to be minus −0.061 in the short run and minus −0.453 in the long run. ​Source: John C. B.​ Cooper, "Price Elasticity of Demand for Crude​ Oil: Estimate for 23​ Countries," OPEC Review​, ​March, 2003, pp.​ 1-8. The demand for crude oil

A. is price elastic in both the short and long run as there exists many substitutes for crude oil.
B. is more price elastic in the long run than in the short run because in the long run a substitute for crude oil may be found.
C. is more price inelastic in the long run than in the short run because in the short run a substitute for crude oil may be found.
D. is equally price inelastic in both the short and long run as there are not many substitutes for crude oil.

Answer 1

The correct answer is the option D: is equally price inelastic in both the short run an long run as there are not many substitutes for crude oil.

Step-by-step explanation:

To begin with, the concept called ''price elasticity of demand'' in the field of economic, refers to the variation that happens in the quantity demanded of a product when its price changes. Moreover, this theory establishes that goods could be either price elastic or price inelastic. In addition to that, the products that are price elastic are the ones whose quantity demanded changes when a variation in its price occur, meanwhile the products that are price inelastic are those whose quantity demanded do not changes when a variation in its price happen.

In conclusion, the demand for crude oil is equally price inelastic in both the short and long run as there are not many substitutes for crude oil and therefore the people will still continue to consume it no matter how many changes in its price will happen, due to its uniqueness.