Suppose the regulated price of gas in 1975 had been S1.50 per thousand cubie feet,instead.How much would there have been? With a regulated price of $1.50 for natural gas and a pric of oil equalt $8.00 per barrel, Demand:Qp=(-5)1.50)+(3.75)(8)=22.5,and Supply:Qs=14+(21.5)+(0.258)=19. With a supply of 19 Tefand a demand of 22.5 Tef there would be an excess demand of3.5Tef Suppose that the market for nat gas had no regulated.If the price ofoil had increased from$to$16,what would have happened to th free market price ofnatural gas? If the price of natural gas had not been regulated and the price of oil had increased from $8 to$16,then Demand:Qp=-5Pg+(3.75)(16)=60-5PG.and Supply:Qs=14+2Pc+(0.25)(16=18+2Pc Equating supply and demand and solving for the equilibrium price 18+2Pa=60-5P。orPa=S6. The price of natural gas would have tripled from $2 to $6 11.The table below shows the retail price and sales for instant coffee and roasted coffee for 1997 and 1998 Retail Price of Sales of Retail Price of Salesof nstant Coffee Instant Coffee Roasted Coffee Roasted Coffee Year ($1b) (million Ibs) ($/1b) (million Ibs) 1997 10.35 75 4.11 820 1998 10.48 70 3.76 850 a.Using this data alone,estimate the short-run price elasticity of demand for roasted coffee.Derive a linear demand curve for roasted coffee. To find elasticity.you must first estimate the slope of the demand curve △Q820-850 30 △P4.11-3.76 =035=-85.7 Given the slope,we can now estimate elasticity using the pric and quantity data from the above table Since the demand curve is assumed tobe linear the elasticity will differ in 1997 and 1998 because price and quantity are b. Suppose the regulated price of gas in 1975 had been $1.50 per thousand cubic feet, instead of $1.00. How much excess demand would there have been? With a regulated price of $1.50 for natural gas and a price of oil equal to $8.00 per barrel, Demand: QD = (-5)(1.50) + (3.75)(8) = 22.5, and Supply: QS = 14 + (2)(1.5) + (0.25)(8) = 19. With a supply of 19 Tcf and a demand of 22.5 Tcf, there would be an excess demand of 3.5 Tcf. c. Suppose that the market for natural gas had not been regulated. If the price of oil had increased from $8 to $16, what would have happened to the free market price of natural gas? If the price of natural gas had not been regulated and the price of oil had increased from $8 to $16, then Demand: QD = -5PG + (3.75)(16) = 60 - 5PG, and Supply: QS = 14 + 2PG + (0.25)(16) = 18 + 2PG. Equating supply and demand and solving for the equilibrium price, 18 + 2PG = 60 - 5PG, or PG = $6. The price of natural gas would have tripled from $2 to $6. 11. The table below shows the retail price and sales for instant coffee and roasted coffee for 1997 and 1998. Retail Price of Sales of Retail Price of Sales of Instant Coffee Instant Coffee Roasted Coffee Roasted Coffee Year ($/lb) (million lbs) ($/lb) (million lbs) 1997 10.35 75 4.11 820 1998 10.48 70 3.76 850 a. Using this data alone, estimate the short-run price elasticity of demand for roasted coffee. Derive a linear demand curve for roasted coffee. To find elasticity, you must first estimate the slope of the demand curve: Q P = 820 − 850 4.11 − 3.76 = − 30 0.35 = −85.7. Given the slope, we can now estimate elasticity using the price and quantity data from the above table. Since the demand curve is assumed to be linear, the elasticity will differ in 1997 and 1998 because price and quantity are