Suppose That, at the Market Clearing Price of Natural Gas

question 14

Multiple Choice

Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price?

• A) A shortage equal to 1.8 percent of the market clearing quantity
• B) A shortage equal to 0.6 percent of the market clearing quantity
• C) A shortage equal to 18 percent of the market clearing quantity
• D) A shortage equal to 6 percent of the market clearing quantity
• E) More information is needed.

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EAFE Index

A stock index that measures the equity market performance of developed markets outside of the U.S. & Canada, known as Europe, Australasia, and Far East.

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EAFE

An acronym for Europe, Australasia, and Far East, and it refers to a stock index that is designed to measure the equity market performance in those regions.