EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 1A.5, Problem 2TTA
To determine
To show the effect of G’s demise on
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Suppose that the world price of coffee fell by 10% last year and the quantity fell by 5%. Which of the following events could explain this?
Consider the crude oil market in the mid-1980s in the United States. Equilibrium price was $22.67 per barrel with 9.33 million barrels consumed on a daily basis.
If the world price is lower than the equilibrium price for a domestic nation (in this case, the United States), the possibility exists for foreign countries to export a product to the domestic nation.
This is the case for crude oil. In this market, assume the world price of crude oil is $16 per barrel:
Which of the following combinations of quantity supplied and quantity demanded would exist in the United States if the world price of crude oil is $16 per barrel as described above.
O A. A quantity demanded of 11 and a quantity supplied of 6.
O B. Aquantity demanded of 11 and a quantity supplied of 11.
O C. A quantity demanded of 6 and a quantity supplied of 11.
O D. All of the above are possible when the world price is $16 per barrel.
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…
Chapter 1A Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
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- What would be the effect of ANVWR production on the world price of oil given that E = - 0.30, n= 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= 106.6 - 0.246p . 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…arrow_forwardVarious international crises and issues periodically raise the price of oil imports, which can send ripple effects throughout the economy. While it might not be the producer that other countries are, the U.S. has vast supplies of oil. What is a likely reason it still imports oil despite the impact of these international influences on prices? Group of answer choices Importing oil allows the U.S. to focus on developing other industries. The U.S.’s environmental standards are too high to produce oil domestically. The opportunity costs of producing all oil products domestically must still be higher than importing. The U.S. is trying to prop up its political partners by importing their oil.arrow_forwardSuppose that the world price of oil is roughly $90.00 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 A.Q=47.50-0.15P. B.Q=13.50-47.50P. C.Q=47.50-P. D.Q=47.50+0.15P. E.Q=13.50-0.15P.arrow_forward
- In early 1998, Luis Tellez, Mexico’s oil minister, held a secret meeting with his Saudi Arabian counterparts. As a government official, he decides how many barrels of oil Mexico would produce and sell to other countries. The purpose of a secret meeting was to increase earnings, or revenues, from selling oil by raising world price of oil, which had fallen 50% over the previous two years. The low oil price was creating serious problems for both governments. A plan to increase oil price will not succeed unless other oil-exporting countries were willing to reduce oil production. Why? Why not just raise prices? To make the plan work, Tellez had to persuade his fellow oil ministers to produce less. But how much less? What information he needs to know in order to answer this question?arrow_forwardALL QUESTIONS APPLY TO GRAPH 23. What quantity will Country B supply from the rest of the world at P=$12? 24. The international equilibrium price is $______. 25. What will be the quantity traded?arrow_forwardConsider that the current world price for copper ore is $5.20 per pound. Suppose the domestic market for copper ore in Chile is described by the following demand and supply equations, respectively: P = 8.80 -0.015Q and P = 0.8 +0.025Q, where P is the price per pound, measured in dollars, and Q is the quantity measured in thousands of pounds per month. Similarly, suppose that the domestic market for copper ore in Japan is described by the following demand and supply equations: P = 6.80 -0.02Q and P = 0.8 +0.04Q, where P is the price per pound, measured in dollars, and Q is the quantity measured in thousands of pounds per month. (Question 7 of 8) After receiving requests from lobbyists and domestic producers, the government of the importing country imposes a tariff of $0.30 in the market for copper ore. As a result of the government's policy, what is the change in the government's revenue in the importing country? (report your answer at 2 decimal places)arrow_forward
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- What showed Americans that they were dependent on the global price of oilarrow_forwardQUESTION 24 Figure 8.1 depicts the supply and demand schedules of calculators for Greece, a "small" country that is unable to affect the world price. Greece's supply and demand schedules of calculators are respectively depicted by SG and DG Assume that Greece imports calculators from either Germany or France. Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit, while France can supply calculators at $30 per unit. Figure 8.1. Effects of a Customs Union 70 40 88 10 O 2 3 S 7 Quantity of Cataton Consider Figure 8.1. Suppose Greece had formed a customs union with Germany, rather than France. The value of the trade diversion effect would be: a. $5 b. $15 C. SO d. $3 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Anearrow_forwardThe opening statement on the website of the Organization of Petroleum Exporting Countries (OPEC) says its members seek “ … to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.” To achieve these goals, OPEC attempts to coordinate and unify petroleum policies by raising or lowering its members’ collective oil production. However, increased production by the United States, Russia, Oman, Mexico, Norway, and other non-OPEC countries has placed downward pressure on the price of crude oil. Please explain: To achieve these goals of stable and fair oil prices, what must OPEC do to maintain the price of oil at its desired level? How easy is it for OPEC to achieve this goal?arrow_forward
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