Concept explainers
Demand for oil. Suppose you have been hired as an economic consultant concerning the world demand for oil. The demand function is
Where q is measured in millions of barrels of oil per day at a price of x dollars per barrel
a. Find the elasticity
b. Find the elasticity at a price of $75 per barrel, stating whether demand is elastic or inelastic at that price
c. Find the elasticity at a price of $100 per barrel stating whether demand is elastic or inelastic at that price
d. Find the elasticity at a price of $20 per barrel, stating whether demand is elastic or inelastic at that price
e. At what price is revenue a maximum?
f. What quantity of oil will be sold at the price that maximizes revenue? Compare the current world price to your answer
g. At a price of $110 per barrel, will a small increase in price cause total revenue to increase or decrease?
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Calculus and Its Applications (11th Edition)
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