0
$\begingroup$

Is oil supply really inelastic in the short run?

Though it remains evident that in the short run, the known capacities of oil can't be increased and hence we can assume that there remains a upper cap which ensures that even if there is high price change, our quantities supplied can't go up. However, if we consider the case of price decrement, then certainly, oil companies can horde oil and reduce the quantity supplied, making the elasticity go high? Then why do we assume that the oil supply in short run is nearly inelastic?

New contributor
Harsh Sharma is a new contributor to this site. Take care in asking for clarification, commenting, and answering. Check out our Code of Conduct.
$\endgroup$
  • 3
    $\begingroup$ 1. What is the source of your claim, who is the "we" assuming this? 2. What exactly do you mean by "short run", how "short" a time period are we talking about? $\endgroup$ – Giskard Oct 9 at 10:31
  • $\begingroup$ 3. If oil companies sometimes hoard oil, then they usually have a stock of it. If the price rises, they can unload part of this stock, hence the upper cap of supply is not production capacity.. $\endgroup$ – Giskard Oct 9 at 10:33

Your Answer

Harsh Sharma is a new contributor. Be nice, and check out our Code of Conduct.

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.