Question

2.18 Economists estimate that the variable cost of production of electrical en ergy in
electricity market is given by the fol lowing expression: · an
C(Q) = 20000 + 500Q + l0Q2($)
C(Q) = 141 400 + 287.S(Q - 86)2($)
forQ ~ 90MWh
for Q ~ 90 MWh
They also estimate that the demand curve for electricity is given by the following
expressions:
For the hour of maximum load : Q = 100 - 0.00125;r(MWh)
For the hour of minimum load : Q = 55 - 0.00ln(MWh)
where ;r is the price in $/MWh.
Sketch the supply and demand curves for this market.
Determine the following quantities at the market equilibrium for the hours of
minimum and maximum load:
a The quantity traded
b The market price
c The revenue collected by the producers
d The total variable cost of production for all the producers
e The economic profit collected by these producers
f The price elasticity of the demand
g The price elasticity of the supply.

Answer 1