Question

Suppose that demand for electricity is given by

P(Q)=400-Q

where Q is the quantity kilowatt hours demanded and P is the price of electricity. The marginal private cost of electricity production is:

MC(Q)=100+.5Q

Assume that electricity production exposes an external cost on society of 30 per kWh. There are no marginal external benefits from the consumption or production of electricity.

1. Find the efficiency quantity of electricity

2. Find the efficient price per kWh of electricity

3. Calculate the deadweight loss that will arise in the absence of government intervention

Answer #1

Suppose that demand for electricity is given by P= 400 -(Q) ,
where Q is the quantity kilowatt hours demanded and
P is the price of electricity. The marginal private cost
of electricity production is: MC(Q) = 100 +1/2Q . Assume that
electricity production exposes an external cost on society of
$30 per kWh. There are no marginal external
benefits from the consumption or production of electricity.
1. Find the efficiency quantity of electricity.
2. Find the efficient price per...

Consider the market for electricity in New York State. Suppose
that the demand for electricity is given by Q=16-0.2P (P=80-5Q)
where Q is measured in billions of kwh and P is measured in cents.
The marginal cost of producing electricity in NYS is MC=5+Q.
If the electricity industry is perfectly competitive, what is
the equilibrium price and quantity of electricity? Graph this.
If instead there are a small number of firms who are able to
collude in this market, what...

Consider the market for electricity in New York State. Suppose
that the demand for electricity is given by Q=16-0.2P (P=80-5Q)
where Q is measured in billions of kwh and P is measured in cents.
The marginal cost of producing electricity in NYS is MC=5+Q.
Suppose that there are three firms in this market who are
competing on the wholesale market by choosing prices (Bertrand
Competition). Firm 1 has a MC=15, Firm 2 has a MC=12, and Firm 3
has a...

Given information, cost equation C(Q), Marginal cost MC(Q), and
its demand for elasticity equation
Q(p). ?(?) = 0.5?3 − 20?2 + 282.5?
MC(?) = 1.5?2– 40? + 282.50
?d(?) = 16 − (1/20)?
The government decides that the lack of competition in this
market is detrimental to the economy and, for that reason,
government intervention is required. The governor proposes
regulating the price of electricity or nationalizing the power
plant. Do you think the governor is right? [Hint: Is there...

Suppose the demand for electricity is given by P = 100 - 2Q, and
the supply schedule is given by P = 10 +
4Q.
a) Determine the equilibrium P & Q in this market. Calculate
CS, PS, and TS.
Now suppose that producing electricity entails emission of
pollutants, which generate external costs
constant at $6 per unit.
b) What is the efficient quantity of electricity provision?
Calculate TS at this level of provision.
What is the efficiency loss if...

The demand and supply for a good are respectively P = 20 – QD
and P = - 4 + 2QS. 17) Determine the equilibrium quantity in the
absence of any intervention by the government. 18) Determine the
equilibrium price in the absence of any intervention by the
government. Suppose the government imposes a quota equal to Q = 6.
19) Determine the maximum price consumers are willing to pay to buy
the good when Q = 6. 20) Determine...

Assume a private supply curve is given by P = 20+5Q. The
corresponding demand curve is given by P = 200 -Q. As it turns out
the supply is associated w/ an external cost of $20 per Q. What is
the resulting Deadweight Loss??
Work please very confused!!!

Monopoly. The Metro Electric Company produces and distributes
electricity to residential customers in the metropolitan area. This
monopoly firm is regulated, as are other investor owned electric
companies. The company faces the following demand function:
P = 0.04 - 0.01Q
Its marginal cost function is:
MC = 0.005 + 0.0075Q,
where Q is in millions of kilowatt hours and P is in dollars per
kilowatt hour. Find the deadweight loss that would result if this
company were allowed to operate...

Suppose the (inverse) demand function facing a firm is p(q)=10 –
q, where p is the price, q is quantity.
1. Draw the (inverse) demand function and marginal revenue. Show
your detailed work such as slope, intercept.
2. Suppose the firm has a marginal cost MC=q, and it is the only
firm in the market (that is, monopoly). Find the output level and
price set by the firm based on your graph in (1). (You do not need
to derive...

Suppose the demand for the good was summarized by the
equations:
P = 100 – 0.5 Q MR = 100 – Q
and that the marginal cost equals the average costs at
$10 per unit.
Calculate the optimum market quantity in a competitive
market. (Hint: Set price equal to marginal cost.)
Calculate the quantity brought to market by the
monopolist, monopolist’s profit and deadweight loss to society from
the monopoly.

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