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In-Class Work #5

In-Class Work #5. In-Class Work #5. Answer this question on foolscap paper while I am taking attendance:. Using the fact that demand for oil is highly price inelastic in the short run but elastic in the long run , explain the following observations:

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In-Class Work #5

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  1. In-Class Work #5

  2. In-Class Work #5 Answer this question on foolscap paper while I am taking attendance: Using the fact that demand for oil is highly price inelastic in the short run but elastic in the long run, explain the following observations: In the 1970s, members of the Organization of Petroleum Exporting Countries (OPEC) decided to raise the world price of oil to increase their incomes. They jointly reduced the amount of oil they supplied. From 1979 to 1981, the price of oil approximately doubled. Yet OPEC found it difficult to maintain a high price. From 1982 to 1985, the price of oil steadily declined about 10 percent per year. Source: Principles of Economics, Gregory Mankiw (For this question only, you may assume that the supply curve has the same shape in the long run and in the short run)

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