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Let Qd=Qs

Part 3 is question B. or Qs=77.05 + 0.095P

Year Price Quantity 2000 42.83 76 2001 35.72 77 2002 36 78 2003 40.55 80 2004 52.43 83 2005 72.25 84 2006 83.63 85 2007 90.36) 86 2008 116.91 85 2009 74.4 84 87 2010 2011 881 2012 94.35 128.01 125.88 120.72 108.17 89 90 2013 2014 91 2015 57.2 93 2016 47.16) 94 2017 57.22 96 97 2018 2019 73.5 65 98 2020 51.84 88 B) Assume that the price elasticity of demand for oil in the 2006-2012 period was -0.10 (a rough estimate based on recent studies). Note on the size of the price elasticity of demand: Demand for oil is very inelastic because oil is essential for transportation, heating, and petrochemicals production. At current prices, there are no close substitutes and it has a low budget burden on consumers in developed countries. Using this price elasticity and the equilibrium price (P) and quantity demanded (Q) in 2012, estimate a linear DEMAND equation for 2012. For quantity demanded (Q), use the consumption data found before in Part 1. Show the relevant steps in your estimation (which formulas or equations are being used?). Which P and Q are being used in the calculation? What are the units of measure of P and Q? Note: Because the estimation is based on a single data point, there is no way to verify the correctness of your estimation, so double-check your method, values, and calculations. A) First, let's assume that the world demand for oil will have risen by about 10% from 2012 to 2025. Using the demand and supply equations found in Part 3, estimate the equilibrium price in 2025 assuming a 10% increase in the world demand for oil from 2012 to 2025 (that is, the demand curve shifts by 10%), but in the scenario that the supply (equation) had not changed since 2012. Note: This demand growth (10%) is relatively small due to the shift towards other energy sources (see the graph on the last page for current energy consumption trends). Show the relevant steps of your estimation, including formula(s) or equation(s) and values used in the estimation of the 2025 price. Year Price Quantity 2000 42.83 76 2001 35.72 77 2002 36 78 2003 40.55 80 2004 52.43 83 2005 72.25 84 2006 83.63 85 2007 90.36) 86 2008 116.91 85 2009 74.4 84 87 2010 2011 881 2012 94.35 128.01 125.88 120.72 108.17 89 90 2013 2014 91 2015 57.2 93 2016 47.16) 94 2017 57.22 96 97 2018 2019 73.5 65 98 2020 51.84 88 B) Assume that the price elasticity of demand for oil in the 2006-2012 period was -0.10 (a rough estimate based on recent studies). Note on the size of the price elasticity of demand: Demand for oil is very inelastic because oil is essential for transportation, heating, and petrochemicals production. At current prices, there are no close substitutes and it has a low budget burden on consumers in developed countries. Using this price elasticity and the equilibrium price (P) and quantity demanded (Q) in 2012, estimate a linear DEMAND equation for 2012. For quantity demanded (Q), use the consumption data found before in Part 1. Show the relevant steps in your estimation (which formulas or equations are being used?). Which P and Q are being used in the calculation? What are the units of measure of P and Q? Note: Because the estimation is based on a single data point, there is no way to verify the correctness of your estimation, so double-check your method, values, and calculations. A) First, let's assume that the world demand for oil will have risen by about 10% from 2012 to 2025. Using the demand and supply equations found in Part 3, estimate the equilibrium price in 2025 assuming a 10% increase in the world demand for oil from 2012 to 2025 (that is, the demand curve shifts by 10%), but in the scenario that the supply (equation) had not changed since 2012. Note: This demand growth (10%) is relatively small due to the shift towards other energy sources (see the graph on the last page for current energy consumption trends). Show the relevant steps of your estimation, including formula(s) or equation(s) and values used in the estimation of the 2025 price

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