The graph depicts a series of changes in the market for oil. The initial demand curve is
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The graph depicts a series of changes in the market for oil. The initial demand curve is D1, and the initial (short-run) supply curve is SSR. First, the demand for oil changes from D1 to D2. This leads to a price increase from $50 to $90. Then, over time, supply becomes more elastic as represented by the supply curve changing from SSR to SLR. This leads to a price drop from $90 to $80. What role does the elasticity of demand play in the price change from $90 to $80?
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