During 1979 an interruption in oil supplies from the Middle East caused the price of home heating oil to rise by more than 100 percent. Concern about how the sudden price increase would impact poor families led the government to seek oil from the world market. Suppose that domestic market demand and supply curves are given as follows: P = 16 – 2QD P = 4 + QS where QD is the quantity demand, QS is the quantity supplied, and P is price ($s/unit). Solve for the equilibrium price and quantity of home heating oil in the domestic market. How many barrels of oil will consumers purchase if the world price is $6/unit?
During 1979 an interruption in oil supplies from the Middle East caused the price of home heating oil to rise by more than 100 percent. Concern about how the sudden price increase would impact poor families led the government to seek oil from the world market. Suppose that domestic market demand and supply curves are given as follows: P = 16 – 2QD P = 4 + QS where QD is the quantity demand, QS is the quantity supplied, and P is price ($s/unit). Solve for the equilibrium price and quantity of home heating oil in the domestic market. How many barrels of oil will consumers purchase if the world price is $6/unit?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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During 1979 an interruption in oil supplies from the Middle East caused the price of home heating oil to rise by more than 100 percent. Concern about how the sudden price increase would impact poor families led the government to seek oil from the world market. Suppose that domestic market
P = 16 – 2QD
P = 4 + QS
where QD is the quantity demand, QS is the quantity supplied, and P is price ($s/unit).
- Solve for the
equilibrium price and quantity of home heating oil in the domestic market. - How many barrels of oil will consumers purchase if the world price is $6/unit?
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