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Homework answers / question archive / Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil

Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil

Economics

Suppose you are an analyst in the oil refinery industry and are responsible for estimating the equilibrium price and quantity of home heating oil. To do 50, you must consider factors that can affect the supply of and demand for heating oil. Determinants of the demand for heating oil include household income, the price of an oil furnace (a complementary good for heating oil), and the price of natural gas (a substitute good for heating ol). Determinants of the supply of heating oil include the cost of crude oil and the cost of refining crude oil into home heating oil. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator (Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) Graph Input Tool Market for Heating Oil Market for Heating Oil 30 70 Supply Price of Heating oil (Dollars per barrel) Quantity Demanded Thousands of barres per day) 100 60 Quantity Supplied (Thousands of barres per day) lars per barrel Demand Shifters Supply Shifters
(Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) Graph Input Tool Market for Heating Oil Market for Heating Oil 80 30 70 Supply Price of Heating oil (Dollars per barrel Quantity Demanded (Thousands of barrels per day) 100 60 Quantity Supplied (Thousands of barrels per day) 60 50 Demand Shifters Supply Shifters PRICE (Dollars per barrel) 40 30 10 25 Cost of Crude Oil (Per barrel of heating in Demand 20 10 2000 15 Price of Natural Gas (Dollars per 1,000 cubic it. Price of an oil Furnace (Dollars per furnace) Average Annual Income (Thousands of dollars Cost of Refining oil (Per barrel of heating old 0 40 0 20 40 60 80 100 120 140 160 QUANTITY (Thousands of barrels per day)
Initially, the price of natural gas is $10 per 1,000 cubic feet, the price of an oil furnace is $2,000, the average annual household income is $40,000, the cost of crude oil is $25 per barrel of heating oil, and the cost of refining oil is $15 per barrel of heating oil. The equilibrium quantity in this market is barrels of heating oil per day, and the equilibrium price is $ per barrel. Suppose that the cost of refining oil decreases from $15 to $10 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market will eventually reach a new equilibrium price of $ per barrel. Reset the calculator to its initial values. (Hint: When you click in the box of any changed values, you will see a circular arrow to the left of the box that enables you to reset numbers to their initial values.) Suppose that instead of a change in the cost of producing heating oil, there was a decrease in the price of an oil furriace from $2,000 to $1,900. If the price of heating oil were to remain at the initial equilibrium price you found in the first question, there would be of heating oil, which pressure on prices would exert
Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator (Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.) Graph Input Tool Market for Heating Oil Market for Heating Oil 30 70 Supply I Price of Heating oil (Dollars per barrel) Quantity Demanded (Thousands of barrels per day) 100 60 Quantity Supplied (Thousands of barrels per day) 60 50 PRICE (Dollars per barrel) 40 Demand Shifters Supply Shifters 30 10 25 Cost of Crude Oil (Per barrel of heating oil Demand 10 1 1 2000 15 Price of Natural Gas (Dollars per 1,000 cubic ft.) Price of an oil Furnace (Dollars per furnace) Average Annual Income (Thousands of dollars) Cost of Refining Oil (Per barrel of heating oil 40 0 20 40 60 80 100 120 140 160 QUANTITY (Thousands of barrels per day)
Initially, the price of natural gas is $10 per 1,000 cubic feet, the price of an oil furnace is $2,000, the average annual household income is $40,000, the cost of crude oil is $25 per barrel of heating oil, and the cost of refining oil is $15 per barrel of heating oil. The equilibrium quantity in this market is barrels of heating oil per day, and the equilibrium price is $ per barrel Suppose that the cost of refining oil decreases from $15 to $10 for each barrel of heating oil produced. Assuming that the rest of the determinants of supply and demand for heating oil remain equal to their initial values, the market will eventually reach a new equilibrium price of S per barrel. Reset the calculator to its initial values. (Hint: When you click in the box of any changed values, you will see a circular arrow to the left of the box that enables you to reset numbers to their initial values.) Suppose that instead of a change in the cost of producing heating oll, there was a decrease in the price of an oil furnace from $2,000 to $1,900. If the price of heating oil were to remain at the initial equilibrium price you found in the first question, there would be of heating oil, which would exert pressure on prices

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