Oil Prices Dive as Saudi Arabia Takes Aim at Russian Production Saudi Arabia cut its price by 10 percent today in retaliation for Russia’s refusal to join in the large production cut last month by the Organization of the Petroleum Exporting Countries. Falling prices are a huge problem for Saudi Arabia because they erode petroleum revenues.

a. How can you use the information in the news clip to determine whether the demand for Saudi Arabian oil is elastic or inelastic?

b. Does the news clip tell us whether the supply of Saudi Arabian oil is elastic or inelastic?
Explain.