question archive In 2014, Saudi Arabia decided to increase production
In 2014, Saudi Arabia decided to increase production
Subject:EconomicsPrice:2.88 Bought3
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.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
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.
A huge shift in prices translating into a small change in quantity means demand and supply are inelastic.
