Question

Demand for oil is very inelastic. If an oil company were to increase its productivity in...

Demand for oil is very inelastic. If an oil company were to increase its productivity in extracting oil, then its revenues would...

a. Stay the same.

b. All of the other options are possible.

c. Rise.

d. Fall.

Homework Answers

Answer #1

Answer to the question:

Option d: Fall.

Explanation: When the oil company increases its productivity, its cost of production declines and the supply increases. This will cause the price to decline and the quantity demanded to increase. Since, it is a industry where the demand is inelastic, So, the percentage change in the price is less than the percetage change in the quantity demanded. Thus, when the demand increases it will lead a to grater decline in the price and thus the total revenue will decline.

Hope, I solved your query. Give good feedback.

Comment, I'll get back to you ASAP.

Stay safe. Thank you.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
N. If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in...
N. If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. rise and the equilibrium quantity to rise. D. stay the same and the equilibrium quantity to fall.
If U.S. Congress imposed an import fee on crude oil, what would happen to the following...
If U.S. Congress imposed an import fee on crude oil, what would happen to the following and explain? a) Would the world demand curve for crude oil: Shift to the right, shift to the left, or stay the same b) World supply curve for crude oil: Shift to the right, shift to the left, or stay the same c) U.S. demand curve for crude oil: Shift to the right, shift to the left, or stay the same d) U.S. supply...
If Congress ended the subsidy for ethanol-based fuels, what would happen to the following and explain?...
If Congress ended the subsidy for ethanol-based fuels, what would happen to the following and explain? a) Would the world demand curve for crude oil: Shift to the right, shift to the left, or stay the same b) World supply curve for crude oil: Shift to the right, shift to the left, or stay the same c) U.S. demand curve for crude oil: Shift to the right, shift to the left, or stay the same d) U.S. supply curve for...
If the demand for unskilled labour were inelastic, would the proposed increase in the minimum wage...
If the demand for unskilled labour were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labour were elastic?
The manager of Vueling is worried about a possible increase in crude oil price volatility. Under...
The manager of Vueling is worried about a possible increase in crude oil price volatility. Under this scenario the uncertainty regarding operational costs of the firm would rise. What strategy with options must Vueling Airlines follow to be hedged against this possibility? Select one: a. Buy put options on the oil crude b. Sell a future contract on the oil crude c. Buy a straddle written on crude oil. d. Sell a straddle written on crude oil
Factors that could cause the SRAS curve to shift are a. Fiscal policy b. Productivity increase...
Factors that could cause the SRAS curve to shift are a. Fiscal policy b. Productivity increase c. Consumer confidence d. Oil price increase QUESTION 2 Which of the following would shift the AS curve? a. The level of government spending b. Incentives to install a new technology c. An increase in labor productivity d. The costs of the factors of production QUESTION 3 Households decide to save a larger portion of their income. According to the AD/AS model this change...
A firm is contemplating increasing the price of its good. What would happen to total​ revenue?...
A firm is contemplating increasing the price of its good. What would happen to total​ revenue? A. It will rise if the demand for their product is price elastic. B. It will fall if the demand for their product is unit elastic. C. It will fall if the demand for their product is price inelastic. D. It will rise if the demand for their product is price inelastic.
If the cross-price elasticity for two goods is equal to −4, then A) the goods are...
If the cross-price elasticity for two goods is equal to −4, then A) the goods are normal goods. B) the goods are inferior goods. C) the goods are substitutes. D) the goods are complements. If the supply curve for housing is perfectly inelastic, a decrease in demand will cause the equilibrium price to: A) rise and the equilibrium quantity to fall. B) rise and the equilibrium quantity to stay the same. C) fall and the equilibrium quantity to fall. D)...
1. When might the demand for labor shift outwards? A. When wages fall B. When labor...
1. When might the demand for labor shift outwards? A. When wages fall B. When labor productivity increases C. When demand for the product falls D. When the price of capital goods falls 2. When is an increase in investment most likely? A. When interest rates rise B. When managers become more optimistic about the economy C. When costs are expected to rise D. When revenues are expected to fall 3. When is the market capitalization of a business most...
According to the real intertemporal model, suppose there is an increase in the current capital stock....
According to the real intertemporal model, suppose there is an increase in the current capital stock. If so, we would expect A. real wages to rise and real interest rates to fall. B. real wages to fall and real interest rates to rise. C. real wages and real interest rates to both rise. D. real wages and real interest rates to both fall. According to the real intertemporal model, suppose there is a decrease in current total factor productivity. If...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT