The supply curve for natural gas coming into Germany is P=10+2Q. You are the sol
ID: 1173171 • Letter: T
Question
The supply curve for natural gas coming into Germany is P=10+2Q. You are the sole buyer (a monopsony) of natural gas coming into Germany. Then you will sell natural gas in the domestic natural gas market in Germany. The demand for natural gas in the domestic market is P= 100-2Q. How much do you buy, if:
(1) (10 points) You are a price taker (as a seller) in the domestic natural gas market?
(2) (10 points) You are a monopolist (as the seller) in the domestic natural gas market?
(3) (20 points) You are a monopolist (as the seller) in the domestic natural gas market, but the price is regulated by the government at $ 60 per unit?
Explanation / Answer
You maximize your net profit = total cost