User Account

All Pages

Calculate the annual change in consumer surplus

Assignment Help Microeconomics
Reference no: EM13158878

Assume the market price of natural gas is $6.40 per mcf (thousand cubic feet) and production and consumption of gas are 23 Tcf (trillion cubic feet). The average price of oil, which affects the demand and supply of gas, is $50 per barrel. The price elasticity of supply is 0.2 and cross-price elasticity of supply is 0.1 (oil and gas are discovered and produced together; therefore, higher price of oil will increase the production of natural gas). The price elasticity of demand is -0.5 and the cross-price elasticity with respect to oil price is 1.5.

a. Obtain the supply equation for natural gas.

b. Obtain the demand equation for natural gas.

c. If price of natural gas is set to $3 per mcf, what impact would this have on the quantity of gas supplied and the quantity demanded?

d. Draw a demand and supply graph and show the effect of price ceiling by highlighting the changes in consumers and producers surplus.

e. Calculate the annual change in consumer surplus.

f. Calculate the annual change in producer surplus.

g. Calculate the annual deadweight loss.

h. Who are largely affected by this price ceiling?

i. Calculate the deadweight loss if price of oil rises to $80 per barrel.

j. What price of oil would yield a free-market price of natural gas of $3?

Reference no: EM13158878

Questions Cloud

Explain to a patient the significance of her disease : What are the most common errors during this process in both the statistics and sampling? How would you explain to a patient the significance of his/her disease?
Power of judicial review in the american system : What is the Supreme Court's justification for its claim to the power of judicial review in the American system of government? Fully explain Chief Justice Marshall's rationale in Marbury v. Madison.
Amount of becky amt adjustment : Becky uses the 200% declining balance method for regular income tax purposes. What is the amount of Becky's AMT adjustment?
What was the concentration of pb(clo3)2 : A 15 mL sample of a solution of Pb(ClO3)2 was diluted with water to 19 mL. A 15 mL sample of the dilute solution was found to contain 0.027 moles of Pb2+. What was the concentration of Pb(ClO3)2 in the original undiluted solution.
Calculate the annual change in consumer surplus : Obtain the demand equation for natural gas and calculate the annual change in consumer surplus
How many homologous pairs of chromosomes : How many homologous pairs of chromosomes do you have in your lung cell, liver cell, ovaries, testicles and egg?
Reason for the unfavorable total budget variance : After all bills for the party were paid, the total came to $2,315. Details are $575 for hotel room rental, $640 for food, $750 for entertainment, and $350 for decorations. 100 persons attended the party. What is the main reason for the unfavorable..
Discussion of the limitations of national culture : Expand the discussion of the limitations of national culture citing examples from the United States and other countries that you are familiar with.
Why men and women have difference vo2 max : Why are there differences in Vo2 max in different exercise tests like Submaximal steady-state 1-mile test, Bradshaw non-exercise etc.?

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd