Demand for oil. Suppose that you have been hired as an economic consultant concerning
Chapter 3, Problem 14(choose chapter or problem)
Demand for oil. Suppose that you have been hired as an economic consultant concerning the world demand for oil. The demand function is q = D1x2 = 63,000 + 50x - 25x2, 0 x 50, where q is measured in millions of barrels of oil per day at a price of x dollars per barrel. a) Find the elasticity. b) Find the elasticity at a price of $10 per barrel, stating whether the demand is elastic or inelastic at that price. c) Find the elasticity at a price of $20 per barrel, stating whether the demand is elastic or inelastic at that price. d) Find the elasticity at a price of $30 per barrel, stating whether the demand is elastic or inelastic at that price. e) At what price is the revenue a maximum? f) What quantity of oil will be sold at the price that maximizes revenue? Compare the current world price to your answer. g) At a price of $30 per barrel, will a small increase in price cause the total revenue to increase or decrease?
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