Suppose that the current price of oil is 60 per barrel and, Ask an Expert

Economics

Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels per day. The current estimates of the price elasticity of supply and demand are η=1 and ε=-.2 respectively.

Compute linear equations for the supply and demand.

What will be the effects on the market price and quantity if the U.S. government suddenly decides to purchase an additional 2 million barrels of oil? Assume that the addition consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per day.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92000570

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