In 2014, Saudi Arabia decided to increase production

Subject:EconomicsPrice:2.88 Bought3

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In 2014, Saudi Arabia decided to increase production. As a result of a relatively small increase in production and little change in demand, the price of oil fell from $85 in 2014 to $42 in 2015. The best explanation for this large drop in prices is:

1) Supply is highly inelastic while demand is highly elastic.

2) Supply is highly elastic while demand is highly inelastic.

3) Both supply and demand are highly inelastic.

4) Both supply and demand are highly elastic.