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Calculate the full economic price

Suppose the market for natural gas can be described 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.

Q1. What are the equilibrium price P* and equilibrium Q*?

Q2. Suppose the governement imposes a price ceiling P(ceiling) of $2 per million BTUs. Determine the total shortage associated with the price ceiling.

Q3. Calculate the full economic price. How much is the non-pecuniary price?

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Solution Preview :

Prepared by a verified Expert

Microeconomics: Calculate the full economic price

Reference No:- TGS01741931

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : Determining the equilibrium price and quantity

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Solution Preview :

Prepared by a verified Expert

Microeconomics: Calculate the full economic price

Reference No:- TGS01741931

Recent Questions Asked Microeconomics

Q : Determining the equilibrium price and quantity

Q : Long run equilibrium-monopolistically competitive industry

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Q : Shortages and surpluses exist for different games

Q : Various forms of market structure

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