we calculated the gains and losses from price controls on
natural gas and found that there was a deadweight loss of? $5.68
billion. This calculation was based on a price of oil of? $50 per
barrel and utilized the following? equations:
QS = 15.90? + 0.72PG ?+ 0.05PO
Demand?: QD = 0.02-1.8PG ?+ 0.69PO
where QS and QD are the quantities supplied and? demanded, each
measured in trillion cubic feet? (Tcf), PG is the price of natural
gas in dollars per thousand cubic feet? ($/mcf), and PO is the
price of oil in dollars per barrel? ($/b).
If the price of oil were ?$60 per? barrel, what would be the?
free-market price of? gas ______
With a ?$60 price of oil per? barrel, the? free-market price of
gas would be ?$_______ per thousand cubic foot. ?(Enter your
response rounded to two decimal places.?)
How large a deadweight loss would result if the maximum
allowable price of natural gas were ?$____ per thousand cubic?
Deadweight loss if the price of natural gas were regulated to be
?$60would be ?$ ____ billion. ?(Enter your response rounded to two
What price of oil would yield a? free-market price of natural
gas of ?$_____
The? free-market price of natural gas would be ?$60 if the price
of oil were ?$____
?(Enter your response rounded to two decimal places.?)