1. Market for natural gas The following are the demand - supply equations representing the natural gas market. Qd = 50 - 2P Qs = 20 + Pa. Solve for the market equilibrium price and the equilibrium quantity. Also draw the demandsupply curves represented by the above equations. b. Calculate the consumer surplus and the producer surplus in this market. c. The government sets a price ceiling equal at $6. Does this price ceiling create a shortage or a surplus? Calculate this shortage/surplus. d. Calculate the new consumer surplus and the new producer surplus after the price ceiling goes into effect. Also calculate the deadweight loss (if any).
1. Market for natural gas The following are the demand - supply equations representing the natural gas market. Qd = 50 - 2P Qs = 20 + Pa. Solve for the market equilibrium price and the equilibrium quantity. Also draw the demandsupply curves represented by the above equations. b. Calculate the consumer surplus and the producer surplus in this market. c. The government sets a price ceiling equal at $6. Does this price ceiling create a shortage or a surplus? Calculate this shortage/surplus. d. Calculate the new consumer surplus and the new producer surplus after the price ceiling goes into effect. Also calculate the deadweight loss (if any).
Chapter1: Making Economics Decisions
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Transcribed Image Text:1. Market for natural gas The following are the demand - supply equations representing the natural gas market. Qd
= 50 - 2P Qs = 20 + Pa. Solve for the market equilibrium price and the equilibrium quantity. Also draw the
demandsupply curves represented by the above equations. b. Calculate the consumer surplus and the producer surplus
in this market. c. The government sets a price ceiling equal at $6. Does this price ceiling create a shortage or a surplus?
Calculate this shortage/surplus. d. Calculate the new consumer surplus and the new producer surplus after the price
ceiling goes into effect. Also calculate the deadweight loss (if any).
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