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Answered

5-55.
Additional Challenge: At the beginning of 1990, oil prices were $20 a barrel. Some oil investors predicted that the price
of oil would increase by $2.25 a barrel per year.
In the beginning of 2005, the price of oil was $30 a barrel. With increasing demand for oll around the world, oil investors in
2005 predicted that the price of oil would increase by $5.00 a barrel each year.
DILOIL
a. Let a represent the number of years since 2005. Write an equation that predicts the price of oil, y, using the information available in 2005.
b. Investors in 1990 did not have the benefit of the 2005 information. Write an equation that represents the prediction made in 1990, using the same variables as in
part (a). Remember that a represents the number of years since 2005.
c. Use the equations you wrote in parts (a) and (b) to determine when the cost of a barrel of oil would be the same for both price predictions.
d. In the spring of 2011, a barrel of oil was selling for about $112. Which prediction was closer? Was it a pretty good prediction?

Answer :

a) The linear function for the 2005 estimate is given as follows: y = 30 + 5x.

b) The linear function for the 1990 estimate is given as follows: y = 53.75 + 2.25x.

c) They would be predicted to have the same cost in the year of 2013.

d) The 1990 prediction was closer, however it still had a large residual, hence neither was good enough.

How to define the linear functions?

The linear functions are defined in the slope-intercept format, given as follows:

y = mx + b.

In which:

  • m is the slope, representing the rate of change for the price.
  • b is the y-intercept, representing the initial cost in the reference year.

Taking 2005 as the estimate, the function is given as follows:

y = 30 + 5x.

Taking 1990 as the estimate, the equation would be of:

y = 20 + 2.25x.

The estimate for 2005 would be of:

y = 20 + 2.25(15) = 53.75.

Hence the equation taking 2005 as the estimate would be of:

y = 53.75 + 2.25x.

The costs would be the same when:

30 + 5x = 53.75 + 2.25x.

2.75x = 23.75

x = 23.75/2.75

x = 8.63 -> + 2005 -> year of 2013.

The estimates for 2011(6 years after 2005) are given as follows:

  • y = 30 + 5x = 30 + 5(6) = $60.
  • y = 53.75 + 2.25(6) = $67.25. (better estimate but not good enough).

More can be learned about linear functions at https://brainly.com/question/24808124

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