Calculate the long run equilibrium quantity in baseline case

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Reference no: EM13999908

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.

Reference no: EM13999908

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Calculate the long run equilibrium quantity in baseline case : 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. Calculate the long run equilibrium p..

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