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Last winter, the price of home heating oil increased by 20% and the quantity demanded of home heating oil decreased by 2%.

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January 8th, 2018

Last winter, the price of home heating oil increased by 20% and the quantity demanded of home heating oil decreased by 2%.At the same time, with no change in the price of wool sweaters, the quantity demanded of wool sweaters went up by 10%.1. What is the elasticity of demand for home heating oil?2. Is home heating oil likely a necessity or a luxury? Why?3. How did total consumer expenditures on home heating oil change? Why?4. What is the cross elasticity of demand of wool sweaters with respect to the price of home heating oil?5. Are home heating oil and wool sweaters substitutes or complements? Why?

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