The nation of Brazil heavily depends on oil sales to earn revenue. They even do offshore drilling because their coastal waters in the Atlantic Ocean also contain massive amounts of oil. A few months ago, when the world oil prices went from $40 per barrel to $50 per barrel, then Brazil ramped up production from 500,000 barrels per day to 1,000,000 barrels per day.They are very liberal with their oil production and do not have strict environmental laws like we have in the U.S.

Conclusion:

What is the Supply Curve Price Elasticity in this case? Is the Brazilian supply curve for oil elastic or inelastic?

New Quantity less Old Quantity

(New Q + Old Q) / 2

---------------------------------------- = Midpoint Price Elasticity of Supply Curve

New Price less Old Price

(New P + Old P) / 2

A)1.50

B)2..25

C)2.75

D)3.00