What would be the effect of ANWR production on the world price of oil given that =0.40, =0.30, thepre-ANWR daily world production of oil is Q1=82 million barrels perday, thepre-ANWR world price is p1=$100 perbarrel, and daily ANWR production would be 0.8 million barrels perday? Forsimplicity, assume that the supply and demand curves are linear and that the introduction of ANWR oil would cause a parallel shift in the world supply curve to the right by 0.8 million barrels per day.

Determine thelong-run linear demand function that is consistent withpre-ANWR world output and price.

Thelong-run demand function is

Q=114.80.328p.

Determine thelong-run linear supply function that is consistent withpre-ANWR world output and price.

Thelong-run supply function is

Q=57.4 + 0.246 p

Determine thepost-ANWR long-run linear supply function.

Thelong-run supply function with ANWR oil production is

Q= 58.2 + 0.246 p

Use the demand curve and thepost-ANWR supply function to calculate the new equilibrium

price and quantity.

Thepost-ANWR equilibrium price is p= ?