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Situation 1: Natural gas
More than half of the homes in the United States are heated by burning natural gas. According to a Wall Street Journal article, demand for natural gas decreased during the winter of 2012 due to unusually warm weather. At the same time, "robust [natural gas] production from US shale fields has created record supplies." Use supply and demand graphs to illustrate your answers to the following
Questions:
1. Can we use this information to be sure whether the equilibrium quantity of natural gas increased or decreased?
Response:
2. Can we use this information to be sure whether the equilibrium price of natural gas increased or decreased? make the chart
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