Consumers Can Use Either Natural Gas or Heating Oil to Warm

question 214

Essay

Consumers can use either natural gas or heating oil to warm their houses. Suppose the price of natural gas increases. Use a demand and supply diagram to show the impact of the higher price of natural gas on the market for home heating oil. $$\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Price (dollars per } \\\text { disk) }\end{array} & \begin{array} { l } \text { Quantity } \\\text { demanded } \\\text { (millions of disks } \\\text { per month) }\end{array} & \begin{array} { l } \text { Quantity supplied } \\\text { (millions of disks } \\\text { per month) }\end{array} \\\hline 0.50 & 50 & 0 \\\hline 1.00 & 40 & 15 \\\hline 1.50 & 30 & 30 \\\hline 2.00 & 20 & 45 \\\hline 2.50 & 10 & 60 \\\hline 3.00 & 0 & 75 \\\hline\end{array}$$

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Definitions:

Random Variable

An element with numerical values produced by the uncertainty of events.

Exponential Distribution

A constant probability distribution that models the time intervals between occurrences in a process where events happen continuously, independently, and at a steady average rate.

Density Function

A function that describes the likelihood of a random variable to take on a given value, often used in the context of continuous probability distributions.

F(x)

Generally refers to a function of x, which might denote a variety of mathematical relationships depending on the context.