Assume that the demand for oil is d p delta delta-where, Ask an Expert

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Assume that the demand for oil is D (P, δ) = δ-where the variable δ is an exogenous demand shifter. The short run supply of oil is S(P) = (P-3)/2. The baseline case is δ=6. Assume that this is a free entry market.

(a) Calculate the long run equilibrium price, in the baseline case.

(b) Calculate the long run equilibrium quantity, in the baseline case.

(c) Returning to the short run scenario, suppose that ä increases to δ=126. Calculate the (short run) equilibrium price and quantity.

(d) Assuming that δ remains at δ=126, calculate the long run equilibrium price and quantity.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91708731

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