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The Price Elasticity Of Oil Are Likely To Be Relatively Elastic Or Relatively Inelastic?

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2.How does the price elasticity of demand and supply of oil affect the magnitude of these price changes?
3.The inelastic of price elasticity of demand and supply of oil will lead the oil price move more whatever the quantity only changed a little bit as the graph.

3. Explain whether (a) the demand for and (b) the supply of oil are likely to be relatively elastic or relatively inelastic? How are these elasticities likely to change over time?
(a) In short run, price elasticity of demand of oil both is inelastic. It is because oil can be processed and become many necessary items for our life like petrol, gasoline, plastic and so on. It is hard to be substitute with other thing, because cost of others substitute energy like ethanol, biomass, coal, liquefied natural gas, and so on either more expensive or technology is not yet mature.
(b) The machinery of produce oil only function is produce oil, it cannot be shift to manufacture other product. That’s why the price elasticity …show more content…

What are the effects of a falling Rouble on the Russian economy?
Main reason of falling Rouble of Russia is the falling of oil price, as a 3rd big oil exporting country, oil occupy a large proportion in its income. This lead to the budget deficit and then falling of Rouble.
(a)First effect is rise in inflation rate, this is because Russia needs more rouble exchange other country currency to import goods and services. This lead goods and services imported more expensive than before and then inflation occurs.
(b)The second effect is gross domestic product(GDP) grow rate decline, this is because falling Rouble makes Russia need more currency to import cause Russia needs cut down major project then leads GDP grow rate fall.
(c)Third effect is hazard for companies that need importing material from foreign country for manufactures product. Rouble falling almost 50% causes these companies material cost increase too. This will reduce profit of these companies then reduce tax income of

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