Suppose the supply and demand curves for natural gas are given by the following equations: QD...

Suppose the supply and demand curves for natural gas are given by the following equations:

QD =34−1.8P QS =18+0.7P,

where Q denotes the quantity of natural gas in thousands of cubic feet and P denotes the price of gas per thousand cubic feet.

4a) Find the equilibrium price and quantity of natural gas. Illustrate your answer using a supply and demand diagram.

4b) Now suppose that the government regulated the market for natural gas and set the regulated price of gas at $4 per thousand cubic feet. Illustrate the impact of the regulated price on the market for natural gas. How much gas is demanded under the regulated price? How much gas is supplied? Is there an excess demand or excess supply of gas? How large is the excess demand or supply?

Expert Solution

Rahul Sunny answered 2 years ago

Question 2 Let’s consider the supply and demand curves for natural gas. Suppose that the supply...

Question 2 Let’s consider the supply and demand curves for natural gas. Suppose that the supply curve is: Qs = 10+ 0.6PG + 0.05PO and the demand curve is: Qd = 0.01−2PG + 0.5PO, where Qs and Qd are the quantities supplied and demanded measured in trillion cubic feet, PG is the price of natural gas in dollars per thousand cubic feet, and PO is the price of oil in dollars per barrel. Suppose that the price of oil is...

Consider the following demand and supply equations. Demand is given by qd = a – bP,...

Consider the following demand and supply equations. Demand is given by qd = a – bP, where qd is the quantity demanded and P is the price. a and b are parameters (constants) Similarly, the supply function is given by qs = d + eP, where qs is the quantity supplied and d and e are constants a. Plot the demand and supply functions. Label the intercepts clearly. b. What is the market equilibrium price and quantity?

You are given the following market supply and demand curves in the Widget industry: QD =...

You are given the following market supply and demand curves in the Widget industry: QD = 250 – 5p QS = 10p – 100 Next, assume that the government has granted a monopoly to ABC Company to produce widgets. Answer the following questions based on this information: (a) What is the marginal cost curve for ABC Company? (b) What is the equation for the marginal revenue curve for ABC Company? (c) Given your answers to parts (a) & (b), what...

The demand and supply curves of physician service is given by the equations -- Demand curve:...

The demand and supply curves of physician service is given by the equations -- Demand curve: Qd= 500 – 3.0 P and Supply curve: Qs = -100 + 1.8 P in absence of insurance. If insurance is introduced with 40% coinsurance, market price and quantity after the introduction of insurance would be Price=$200 and Q=260 Price=$125 and Q=125 Price=$200 and Q=0

Suppose demand and supply can be characterized by the following equations: Qd = 6 – 2P...

Suppose demand and supply can be characterized by the following equations: Qd = 6 – 2P Qs = P Price is in dollars; quantity is in widgets. For parts (c) and (d), assume a tax of $1.50 per widget sold is imposed on sellers. Show your work for each step below. C. Find the equilibrium price buyers pay, price sellers get, and quantity algebraically. D. Calculate the following: consumer surplus producer surplus total firm revenue production costs total tax revenue...

Suppose the demand and supply for a product are described by the equations Qd = 1080...

Suppose the demand and supply for a product are described by the equations Qd = 1080 -4P and Qs = -120+8P. a. Find the equilibrium P, Q and elasticities of demand and supply b. If a $6 per unit tax is levied on the demand for the product, find new P, Q and the percent of the tax incidence that falls on consumers and firms. c. Find the tax revenue and welfare loss associated with the tax. d. Now double...

Suppose the market for corn is given by the following equations for supply and demand: QS = 2p − 2 QD = 13 − p

Suppose the market for corn is given by the following equations for supply and demand: QS = 2p − 2 QD = 13 − p where Q is the quantity in millions of bushels per year and p is the price. Calculate the equilibrium price and quantity. Sketch the supply and demand curves on a graph indicating the equilibrium quantity and price. Calculate the price-elasticity of demand and supply at the equilibrium price/quantity. The government judges the...

Suppose that demand is given by P = 20 - Qd and supply is given by...

Suppose that demand is given by P = 20 - Qd and supply is given by P = 4 + Qs. Which of the following could represent the Social Marginal Benefit and Social Marginal Cost curves if there is a negative production externality? P = 16 - Qd and P = 2 + Qs P = 24 - Qd and P = 4 + Qs P = 20 - Qd and P = 2 + Qs P = 20 -...

1. (a) The demand and supply equations for a good (X) are given by Qd= 4000...

1. (a) The demand and supply equations for a good (X) are given by Qd= 4000 – 25p and Qs = -2000 + 35P respectively, where P = price. (i) Draw the demand and supply curves for good X on a graph. (ii) Find the equilibrium price and quantity. (iii) The government imposes a specific sales tax of R20 per unit on good X. Show the resulting effect on the graph and find the new equilibrium price and quantity. (iv)...

1.Suppose the demand and supply for milk is described by the following equations: Qd= 600-100P and...

1.Suppose the demand and supply for milk is described by the following equations: Qd= 600-100P and Qs= -150 + 150P, where P is the price of a gallon of milk.a.What is the equilibrium price and quantity?b.Suppose the US government imposes a $1 per gallon milk tax on dairy farmers. What is the new equilibrium price and quantity? How much do consumers now pay? How much do producers now receive? How much tax revenue is raised by the milk tax?c.Based on...

Question