Assume there is an increase in the price of electricity (which is the result of a decrease in the supply of electricity), and electricity and natural gas are substitutes
How would this affect the demand for natural gas, and what would happen to the equilibrium price and quantity of natural gas?
The increase in the price of electricity would cause the quantity demanded, as well as the equilibrium quantity of electricity, to decrease. Because electricity and natural gas are substitutes, the increase in the price of electricity and corresponding decrease in quantity would cause an increase in the demand for natural gas. The increase in the demand for natural gas would cause the equilibrium price and quantity of natural gas to increase as well.
You might also like to view...
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?
What will be an ideal response?
Describe intellectual property rights. What agreements have been reached regarding their protection? What are the benefits and the costs of protecting intellectual property rights?
What will be an ideal response?
Marginal utility is the extra utility a consumer derives from consuming an extra unit of a good
a. True b. False