If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is
A)income inelastic.
B)income elastic.
C)elastic.
D)inelastic.
E)unit elastic.

Question

Quizplus · Accepted Answer

Saudi Arabia's argument that an increase in the supply of oil will decrease total revenue indicates that the demand for oil is inelastic. This is because, in the short run, a change in supply will not result in a significant change in demand, leading to a decrease in revenue. If the demand for oil were elastic, a decrease in price would lead to a more than proportionate increase in demand, leading to an increase in total revenue.

If Saudi Arabia Argues That an Increase in the Supply