When John Wicks opened his natural gas bill for January he was very happy. It was $147, not the usual $300 for the coldest month. Natural gas provider CenterPoint Energy said higher temperatures had lowered the annual bill for the average Minnesota customer by $300 compared with two years ago.

a. How is the price of natural gas determined?

b. When demand decreases, explain the process by which the market adjusts.

c. On a graph, show the effect of the decrease in demand on consumer surplus and producer surplus.