EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 2, Problem cFCT
To determine
To explain:
Effect of increase in production of ethanol on its
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Suppose that the world demand and supply elasticities of crude oil are -0.906 and 0.515, respectively. The current equilibrium price is $30 per barrel and the equilibrium quantity is 16.88 billion barrels per year.
Derive the linear demand and supply equations.
Now suppose the world supply curve you derived above consists of competitive supply and OPEC supply. If the competitive supply equation is: SC = 7.78 + 0.29P, what must be OPEC's level of production in this equilibrium?
Now suppose social and political unrest in some non-OPEC producing countries reduced the competitive supply by 30 percent, what happens to the world price of crude oil?
Q2 At the price of $5.50 per tonne, the annual Canada-wide supply and demand for corn
are 2.4 and 2.9 kilotonnes, respectively. When the price rises to $7.30, the supply increases to
2.8 kilotonnes while the demand decreases to 2.4 kilotonnes. (Note that the units for quantities
will be in kilotonnes DO NOT convert them to tonnes.)
(Q2 a) Assuming that the price (per tpnne) is a linear function of the quantity (in q
kilotonnes) supplied, determine the supply function p = f(q). State clearly the appropriate model
to use and show all your work for finding the function.
(Q2 b) Assuming that the price (per tpnne) is a linear function of the quantity (in q
kilotonnes) demanded, determine the demand function p = f(q). State clearly the appropriate
model to use and show all your work for finding the function.
( Q2 c) Find the equilibrium point and the market clearing price. Show all your work.
(Q2 d) Sketch the supply and demand functions on the same graph clearly indicating the
equilibrium…
Enter the final equilibrium quantity and price indicated on the graph below.
$9
$8
S2
$7
$6
D2
$1
$0
4
8
10
12
Gallons of Gasoline (in thousands of gallons/week)
Provide your answer below:
quantity
thousand gallons price = $|
per gallon
Price per Gallon
Chapter 2 Solutions
EBK ECONOMICS TODAY
Ch. 2 - Prob. 2.1LOCh. 2 - Prob. 2.2LOCh. 2 - Prob. 2.3LOCh. 2 - Prob. 2.4LOCh. 2 - Prob. 2.5LOCh. 2 - Prob. aFCTCh. 2 - Prob. bFCTCh. 2 - Prob. cFCTCh. 2 - Prob. dFCTCh. 2 - Prob. 1CTQ
Ch. 2 - Prob. 2CTQCh. 2 - Prob. 1FCTCh. 2 - Prob. 2FCTCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Prob. 18P
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- Suppose that the world price of oil is roughly $50.00 per barrel and that the world demand and total world supply of oil equal 34 billion barrels per year (bb/yr), with a competitive supply of 20 bb/yr and 14 bb/yr from OPEC. Statistical studies have shown that the long-run price elasticity f demand for oil is -0.40, and the long-run competitive price elasticity of supply is 0.40. Using this information, derive linear demand and competitive supply curves for oil. Let the demand curve be of the general form Q = a - bP and the competitive supply curve be of the general form Q = c+dP, where a, b, c, and d are constants. The equation for the long-run demand curve is O A. Q=47.50 -0.27P. O B. Q=13.50 -0.27P. OC. Q=47.50-P O D. Q=47.50+ 0.27P. O E. Q=13.50-47.50P. The equation for the long-run competitive supply curve is O A. Q=12.00 + 47.50P. OB. Q=12.00 -0.16P. OC. Q 8.00+ 0.16P. O D. Q=8.00+ 0.27P. O E. Q=12.00 +0.16P.arrow_forwardSuppose that the world price of oil is roughly $100.00 per barrel and that the world demand and total world supply of oil equal 34 billion barrels per year (bb/yr), with a competitive supply of 20 bb/yr and 14 bb/yr from OPEC. Statistical studies have shown that the short−run price elasticity of demand for oil is −0.05, and the short−run competitive price elasticity of supply is 0.10. Using this information, derive linear demand and competitive supply curves for oil. Let the demand curve be of the general form Q=a−bP and the competitive supply curve be of the general form Q=c+dP, where a, b, c, and d are constants. The equation for the short−run demand curve is? The equation for the short−run competitive supply curve isarrow_forwardSuppose a depletable natural resource has no substitute. The resource can be extracted from the ground at a constant marginal cost. Furthermore, the marginal willingness to pay exceeds the marginal cost for the initial quantities of the resource, so it is worth extracting at least some of the resource. In a dynamically efficient allocation over many periods, when will most of the resource be extracted (earlier periods or later periods)? Why? At what point will the resource run out? Will the resource run out abruptly or smoothly? Why?arrow_forward
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