What would be the effect of ANWR production on the world price of oil given that = -0.50, n=0.40, the pre-ANWR daily world production of oil is Q₁ = 82 million barrels per day, the pre-ANWR world price is p₁ = $100 per barrel, and daily ANWR production would be 0.8 million barrels per day? For simplicity, assume that the supply and demand curves are linear and that the introduction of ANWR oil would cause a parallel shift in the world supply curve to the right by 0.8 million barrels per day. Determine the long-run linear demand function that is consistent with pre-ANWR world output and price. The long-run demand function is Q= 123-0.41p. Determine the long-run linear supply function that is consistent with pre-ANWR world output and price. The long-run supply function is Determine the post-ANWR long-run linear supply function. The long-run supply function with ANWR oil production is Q= 50+ 0.328p. Use the demand curve and the post-ANWR supply function to calculate the new equilibrium price and quantity. The post-ANWR equilibrium price is The post-ANWR equilibrium quantity is Q= 49.2+0.328p. p=$98.92. (Enter a numeric response using a real number rounded to two decimal places.) OA. the price elasticity of demand for oil is very elastic. OB. the price elasticity of supply for oil is very inelastic. C. ANWR oil production is a small portion of worldwide supply. OD. oil prices are only slightly affected by wars in the Middle East. OE. both a and b. Q = 82.44 million barrels per day. With ANWR production, the equilibrium price of oil decreases by $ 1.08. With ANWR production, the equilibrium quantity of oil increases by 0.44 million barrels per day. Why does the equilibrium price of oil fall by only a small amount with ANWR oil production? The price of oil falls by only a small amount because
What would be the effect of ANWR production on the world price of oil given that = -0.50, n=0.40, the pre-ANWR daily world production of oil is Q₁ = 82 million barrels per day, the pre-ANWR world price is p₁ = $100 per barrel, and daily ANWR production would be 0.8 million barrels per day? For simplicity, assume that the supply and demand curves are linear and that the introduction of ANWR oil would cause a parallel shift in the world supply curve to the right by 0.8 million barrels per day. Determine the long-run linear demand function that is consistent with pre-ANWR world output and price. The long-run demand function is Q= 123-0.41p. Determine the long-run linear supply function that is consistent with pre-ANWR world output and price. The long-run supply function is Determine the post-ANWR long-run linear supply function. The long-run supply function with ANWR oil production is Q= 50+ 0.328p. Use the demand curve and the post-ANWR supply function to calculate the new equilibrium price and quantity. The post-ANWR equilibrium price is The post-ANWR equilibrium quantity is Q= 49.2+0.328p. p=$98.92. (Enter a numeric response using a real number rounded to two decimal places.) OA. the price elasticity of demand for oil is very elastic. OB. the price elasticity of supply for oil is very inelastic. C. ANWR oil production is a small portion of worldwide supply. OD. oil prices are only slightly affected by wars in the Middle East. OE. both a and b. Q = 82.44 million barrels per day. With ANWR production, the equilibrium price of oil decreases by $ 1.08. With ANWR production, the equilibrium quantity of oil increases by 0.44 million barrels per day. Why does the equilibrium price of oil fall by only a small amount with ANWR oil production? The price of oil falls by only a small amount because
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:What would be the effect of ANWR production on the world price of oil given that ɛ = - 0.50, 1 = 0.40, the pre-ANWR daily world production of oil is Q, = 82 million barrels per day,
the pre-ANWR world price is p, = $100 per barrel, and daily ANWR production would be 0.8 million barrels per day? For simplicity, assume that the supply and demand curves are
linear and that the introduction of ANWR oil would cause a parallel shift in the world supply curve to the right by 0.8 million barrels per day.
Determine the long-run linear demand function that is consistent with pre-ANWR world output and price.
The long-run demand function is
Q = 123 – 0.41p`.
Determine the long-run linear supply function that is consistent with pre-ANWR world output and price.
The long-run supply function is
Q = 49.2 + 0.328p`.
Determine the post-ANWR long-run linear supply function.
The long-run supply function with ANWR oil production is
Q= 50 + 0.328p'.
Use the demand curve and the post-ANWR supply function to calculate the new equilibrium price and quantity.
The post-ANWR equilibrium price is
p = $ 98.92'. (Enter a numeric response using a real number rounded to two decimal places.)
The post-ANWR equilibrium quantity is
Q= 82.44 million barrels per day.
With ANWR production, the equilibrium price of oil decreases by $ 1.08.
With ANWR production, the equilibrium quantity of oil increases by 0.44 million barrels per day.
Why does the equilibrium price of oil fall by only a small amount with ANWR oil production?
The price of oil falls by only a small amount because
A. the price elasticity of demand for oil is very elastic.
B. the price elasticity of supply for oil is very inelastic.
C. ANWR oil production is a small portion of worldwide supply.
D. oil prices are only slightly affected by wars in the Middle East.
E. both a and b.
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