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 of 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 OA. Q=47.50-0.27P. OB. Q=13.50-0.27P OC. Q=47.50-P. OD. Q=47.50 +0.27P OE. Q=13.50-47.50P. The equation for the long-run competitive supply curve is OA. Q=12.00+ 47.50P. OB. Q=12.00-0.16P OC. Q=8.00+ 0.16P. OD. Q 8.00 +0.27P. OE. Q=12.00 +0.16P

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 of 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 OA. Q=47.50-0.27P. OB. Q=13.50-0.27P OC. Q=47.50-P. OD. Q=47.50 +0.27P OE. Q=13.50-47.50P. The equation for the long-run competitive supply curve is OA. Q=12.00+ 47.50P. OB. Q=12.00-0.16P OC. Q=8.00+ 0.16P. OD. Q 8.00 +0.27P. OE. Q=12.00 +0.16P

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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