Computing the full economic price

Reference no: EM1374349

Assume the market for natural gas can be explained by:

Demand: Q(D)= 80 - 5P
Supply: Q(S)= 20 - 15P

Where P is the price ($) of natural gas per million BTU, Q(D) is the quantity demanded and Q(S) is the quantity supplied of million BTUs of natural gas per day.

[A] Determine the equilibrium price P* and equilibrium Q*?

[B] Assume the government imposes a price ceiling P(ceiling) of $2 per million BTUs. Find the total shortage associated with the price ceiling.

[C] Compute the full economic price. How much is the non-pecuniary price?

Reference no: EM1374349

Questions Cloud

Important question related to supply : Microeconomics is the study of economics at the individual or micro level. One of the most well known microeconomic models is the production possibilities frontier,

Estimate expected demand : If we believe that the laws of supply and demand always hold, explainc why is it that the 'popular' gifts for the holidays always sell out early?

World real gdp and the price level : Assume the recent volcanic events in Iceland, which disrupted European air travel significantly, represented just starting. In other words, assume that experts forecast a world-wide series of big eruptions from active volcanoes.

Determine factors that influence price elasticity of demand : Select a product you have purchased in the past month from a clothing or shoe store. Explain how each of the four factors contributed to the elasticity of the good.

Computing the full economic price : Assume the market for natural gas can be explained by, Where P is the price of natural gas per million BTU, Q(D) is the quantity demanded and Q(S) is the quantity supplied of million BTUs of natural gas a day.

Various forms of market structure : The president of your corporation, Mr. daily, has asked you to make a report describing the many forms of market structure. He describe to you that the report will be handed out to staff prior to the staff meeting next week

Stabilizing financial systems : This briefing is particularly important because of the global financial crisis that began in 2007. The briefing is required to provide more foundation for the finance team because they are not well versed in international aspects of finance.

Develop a graphical user interface based java program : Develop a Java program that can communicate with a real SMTP email server for sending emails. TNE 60003 - introduction to network programming, You program should provide a GUI and can successfully send the SMTP commands to the mail server

Determine effect on optimal price : The United States cigarette industry has negotiated with Congress and government agencies to settle liability claims against it. Under the proposed settlement, cigarette firms will make fixed yearly payments to government based on their historic mark..

User Account

All Pages