The supply and demand functions for natural gas from 1950 to 2007 are followings. Qs= 0,02 + 0,7P…

The supply and demand functions for natural gas from 1950 to
2007 are followings.

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Qs= 0,02 + 0,7Pg + 0,045Po + 0,06I

Qd= 148,82 -1,8 Pg + 0,069Po + 0,05I

Where Pg is the price of natural gas, Po is the price of crude
oil, the average price of oil is about $50 per barrel, and the
income is $5000.

(i) What is the equilibrium price and quantity for natural gas,
i.e. (Pg*,Qg*)? Explain verbally!

(ii) Calculate the price elasticity, income elasticity and cross
price elasticity for the demand of natural gas at the equilibrium,
and explain briefly.

(iii) Calculate the price elasticity, income elasticity and
cross price elasticity for the supply of natural gas at the
equilibrium, and explain briefly.

(iv) Explain the supply and demand functions briefly, e.g. the
estimates of variables and their positive/negative signs.