Explain how the development of a natural gas export terminal will affect the market for natural gas in the United States. Assuming that the natural gas prices are $3.00 per BTU, illustrate the effect of an export terminal on the demand for natural gas in the United States. Assuming that the natural gas prices in Europe are $6.00 per BTU, draw a diagram to illustrate how the development of a natural gas terminal in the United States will affect supply and demand in the natural gas market for Europe. How will the exporting of natural gas from the United States to Europe affect consumers and producers in both the places? Note that most of the natural gas in Europe originates from Russia’s state owned natural gas company, Gazprom. Concept Introduction: Demand - Demand is the quantity of a commodity that a consumer is willing to purchase at a particular price in a given period of time. Supply - Supply is the quantity of a commodity that producer is willing to sell at a particular price in a given period of time. Substitution Effect - When the consumer chooses a cheaper good against a dearer one for the same use, it is called the substitution effect.

Question

Fems A and B are duopolist producers of widgets. The cost function for producing widgets C(Q)-Q² The market demand function for widgets i Q-192P Qmeasures thousands of widgets per year, Competition in the widget market is described by the Coumot model Instructions: Round your answers to 2 decimal places a What are the firms' Nanh equbrium output? b. What is the resulting price? c. What do they each emp How does the price compare to marginal cost? Price is ck to marginal cost How do the price and the two fems' joint profit compare to the monopoly price and prof Compared to the monopoly price, the Cournot price is to sed. Compared to the monopoly profit, the joint profit of the two fems to select

Answer 1

Question

Chapter 8, Problem 12P

To determine

Explain how the development of a natural gas export terminal will affect the market for natural gas in the United States.

Assuming that the natural gas prices are $3.00 per BTU, illustrate the effect of an export terminal on the demand for natural gas in the United States.

Assuming that the natural gas prices in Europe are $6.00 per BTU, draw a diagram to illustrate how the development of a natural gas terminal in the United States will affect supply and demand in the natural gas market for Europe.

How will the exporting of natural gas from the United States to Europe affect consumers and producers in both the places? Note that most of the natural gas in Europe originates from Russia’s state owned natural gas company, Gazprom.

Concept Introduction:

Demand - Demand is the quantity of a commodity that a consumer is willing to purchase at a particular price in a given period of time.

Supply - Supply is the quantity of a commodity that producer is willing to sell at a particular price in a given period of time.

Substitution Effect - When the consumer chooses a cheaper good against a dearer one for the same use, it is called the substitution effect.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Fems A and B are duopolist producers of widgets. The cost function for producing widgets C(Q)-Q² The market demand function for widgets i Q-192P Qmeasures thousands of widgets per year, Competition in the widget market is described by the Coumot model Instructions: Round your answers to 2 decimal places a What are the firms' Nanh equbrium output? b. What is the resulting price? c. What do they each emp How does the price compare to marginal cost? Price is ck to marginal cost How do the price and the two fems' joint profit compare to the monopoly price and prof Compared to the monopoly price, the Cournot price is to sed. Compared to the monopoly profit, the joint profit of the two fems to select

Suppose the marginal social cost of television sets is $100. This is constant and equal to the average cost of television sets. The annual demand for television sets is given by the following equation: Q = 200,000-500P, where Qis the quantity sold per year and P is the price of television sets. a) If television sets are sold in a perfectly competitive market, calculate the annual number sold. Under what circumstances will the market equilibrium be efficient? b) Show the losses in well-being each year that would result from a law limiting sales of television sets to 100,000 per year. Show the effect on the price, marginal social benefit, and marginal social cost of television sets. Show the net loss in well-being that will result from a complete ban on the sales of television sets. (show with graphs.)

refer to exhibit 8.12 and identify each curve in the graph