00:01
So before we talk about oil, let's talk about elasticity, since elasticity shows up in all the answers, or at least most of them.
00:08
Elasticity is the percent change versus the percent price.
00:12
So for large elasticity, you must be able to get big changes in quantity, right? that's what elastic means that quantity can change a lot.
00:29
You must be able to change quantity a lot.
00:32
If quantity cannot change a lot because there are no substitutes, there are no replacements, there are no alternatives, then you've got a very inelastic good, right? so elastic means that quantity can change a lot.
00:46
Inelastic means that it can't change a lot.
00:50
And we're given two things here, right? new oil, that is new q, takes years, which is a long time, right? and substitutes are limited.
01:07
Both of these are telling you that quantity can't change much, right? because there's simply no alternative, right? point one is telling you that the supply quantity can't change much because it takes a very long time to bring new supply to market...