nps1F8A.tmp - Homework Assignment #4: Energy Economics 324...

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Homework Assignment #4: Energy Economics 324 Due: Wednesday, February 24 1. a. What is the difference (conceptually) between the short run price and income elasticities of the demand for gasoline and the long run price and income elasticities of the demand for gasoline? b. Why are measured long-run elasticities larger than measured short-run elasticities? c. List three measures the government could take the would allow the elasticity of gasoline to more rapidly shift from its short-run level to its long-run level. 2. a. In the time period immediately prior to the beginning of the Iraq War, what was the approximate price of crude oil per barrel and what was the approximately daily world production of oil. Cite your source as well as the specific month or year of your data. d b. Assume that the short-run world demand (Q ) for oil can be characterized by the following s demand curve and that the short-run supply (Q ) of oil from other suppliers is perfectly inelastic: D S Q = 85 - .3P Q = 76 What is the equilibrium price and quantity of oil? c. What is the price elasticity of demand and the price elasticity of supply of oil at a price of $30. d. Now suppose the Iraq War takes 3.0 million barrels per day of Iraqi supplies off of the market. What is the new equilibrium price and quantity of oil?
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This note was uploaded on 05/04/2010 for the course EDUC 22331 taught by Professor Feev during the Spring '10 term at The School of the Art Institute of Chicago.

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nps1F8A.tmp - Homework Assignment #4: Energy Economics 324...

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