Chapter 12.6, Problem 32E

Price Elasticity of Supply Given a supply equation of the form $q=f\left(p\right)$, the associated price elasticity of supply is defined as the percentage rate of increase of supply per percentage increase in price:

$E=\frac{dq}{dp}\cdot \frac{p}{q}.$

(Note that the formula is the same as for price elasticity of demand except for the sign.) Exercises 31 and 32 are based on this formula

Saudi Crude Oil Supply: Low Prices For crude oil prices point when of at most $20 per barrel the supply by Saudi Arabia can be approximated by

$q=0.34p+1.2\text{ million barrels per day }\left(12\le p\le 20\right),$ where p is the price per barrel. Calculate the price elasticity of supply when the price of oil is $15 per barrel. What does the answer tell you about Saudi oil production?