The short-run demand and supply elasticities for oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short-run equilibrium quantity is 23.84 million barrels per year. 1. Derive the linear demand and supply equations.
The short-run demand and supply elasticities for oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short-run equilibrium quantity is 23.84 million barrels per year. 1. Derive the linear demand and supply equations.
Chapter6: Elasticity
Section: Chapter Questions
Problem 11QP: Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price...
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The short-run demand and supply elasticities for oil are -0.076 and 0.088,
respectively. The current price per barrel is $30 and the short-run
is 23.84 million barrels per year.
1. Derive the linear demand and supply equations.
2. What will be the effects on the market price and quantity if the government decides to purchase (and store away) an additional 2 million barrels of oil? Assume that the additional consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per day.
3. What could be the economic rationale for buying and storing oil?
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