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Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels ...

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Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels ...

Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels per day. The current estimates of the price elasticity of supply and demand are η = 1 and
ε = -.2 respectively. What will be the effects on the market price and quantity if the U.S. government suddenly decides to purchase an additional 2 million barrels of oil? Assume that the supply and demand curves are linear and the addition consumption of oil by the government results in a parallel shift of the supply curve to the left by 2 million barrels per day.

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Microeconomics: Theory and Applications with Calculus

Edition: 4^th

Author: Perloff

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Thanks for your help!!

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