Economics 0455 · IGCSE · Price elasticity of demand (PED)

Price elasticity of demand (PED) — practice question

A blast in a major oil pipeline makes the world price of a barrel of oil rise from $50 to $100. Prior to the blast, world demand for oil was 100 million barrels per day. The world price elasticity of demand for oil is $-0.2$. What is the new worldwide demand for oil (barrels per day) following the blast?

  • A20 million
  • B80 million
  • C90 million
  • D120 million

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