Derive the linear demand and supply, Microeconomics

Suppose that the short-run world demand and supply elasticities for crude oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short -run equilibrium quantity is 23.84 billion barrels per year (bb/yr).

(i)  Derive the linear demand and supply equations.

(ii) The opening of a new pipeline is expected to add to oil supply. If the crude oil supply increases by 0.5 bb/yr, what will be the new world price and quantity of oil?

(iii)Did total oil production increase by 0.5bb? If not, explain why (hint: it does not) and use a graph of Supply and Demand illustrating this.


Posted Date: 2/15/2013 1:43:38 AM | Location : United States

Related Discussions:- Derive the linear demand and supply, Assignment Help, Ask Question on Derive the linear demand and supply, Get Answer, Expert's Help, Derive the linear demand and supply Discussions

Write discussion on Derive the linear demand and supply
Your posts are moderated
Related Questions
reason for kinked demand curve

#• The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded. • The price of a pack of cigarettes increases by 10% and there is a 5% drop in the quan

THEORY OF INTER-TEMPORAL CONSUMPTION: In the previous two units, we have been concerned with choices among contemporaneous commodities. An important class of choices made by c

Elasticity of Market Supply • Perfectly inelastic short run supply arises when industry's plant and equipment are so fully utilized that new plants should be built to ac, the online bookstore, wants to increase it''s total revenue. One strategy is to offer a 10% discount on every book that sells. knows it''s customers can be divid

discus how opportunity cost influence supplier''s decision to supply labour

Determinants of Private Demand - Waiting-Time for Employment ‘Waiting time’ for employment is another important factor. The waiting time varies from course to course. For inst

National income accounting: Final Goods: Final goods are goods and services which are being purchased for final use and not for resale or further processing or manufacturing

Demand and supply curve for french breads