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1. Natural Monopoly Given the inverse supply and inverse demand equation below, 1 -30D + 40 1 Ps= -5QD+30 a. Find the equilibrium without any government intervention (Q* = 21.4, P = 32.9) b. If the market is to be regulated, find the minimum subsidy to get an optimal equilibrium (562.5) 2. Two sided bidding These are the list of bids from electricity producers as well as electricity distribution firms. Electricity producers Electricity distribution Asking price/KWh quantity/KWh Asking price/KWh quantity/KWh 25 35 35 60 35 20 30 15 40 40 $ $ $ $ $ PD = - 0.77 0.36 0.48 0.55 0.68 $ $ $ S $ 0.50 0.38 0.57 0.68 0.44 a. Find the optimal market price and quantity (P* = 48 to 50, Q* = 70) b. Find the total welfare 3. Peak-load pricing Given the following peak demand and off peak demand, Qpeak-PD + 120 Qoffpeak = -2PD + 60 a. If the operational cost for off peak and peak period is $5 and the capital cost is $50, find the optimal pricing mechanism! (PPeak = $55, Poffpeak = $5) b. If the capital cost is $70 instead of $50, find the optimal pricing mechanism! (PPeak = $73.3, Poffpeak = $6.66)

1. Natural Monopoly Given the inverse supply and inverse demand equation below, 1 -30D + 40 1 Ps= -5QD+30 a. Find the equilibrium without any government intervention (Q* = 21.4, P = 32.9) b. If the market is to be regulated, find the minimum subsidy to get an optimal equilibrium (562.5) 2. Two sided bidding These are the list of bids from electricity producers as well as electricity distribution firms. Electricity producers Electricity distribution Asking price/KWh quantity/KWh Asking price/KWh quantity/KWh 25 35 35 60 35 20 30 15 40 40 $ $ $ $ $ PD = - 0.77 0.36 0.48 0.55 0.68 $ $ $ S $ 0.50 0.38 0.57 0.68 0.44 a. Find the optimal market price and quantity (P* = 48 to 50, Q* = 70) b. Find the total welfare 3. Peak-load pricing Given the following peak demand and off peak demand, Qpeak-PD + 120 Qoffpeak = -2PD + 60 a. If the operational cost for off peak and peak period is $5 and the capital cost is $50, find the optimal pricing mechanism! (PPeak = $55, Poffpeak = $5) b. If the capital cost is $70 instead of $50, find the optimal pricing mechanism! (PPeak = $73.3, Poffpeak = $6.66)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Natural Monopoly Given the inverse supply and inverse demand equation below, 1 -30D + 40 1 Ps= -5QD+30 a. Find the equilibrium without any government intervention (Q* = 21.4, P = 32.9) b. If the market is to be regulated, find the minimum subsidy to get an optimal equilibrium (562.5) 2. Two sided bidding These are the list of bids from electricity producers as well as electricity distribution firms. Electricity producers Electricity distribution Asking price/KWh quantity/KWh Asking price/KWh quantity/KWh 25 35 35 60 35 20 30 15 40 40 $ $ $ $ $ PD = - 0.77 0.36 0.48 0.55 0.68 $ $ $ S $ 0.50 0.38 0.57 0.68 0.44 a. Find the optimal market price and quantity (P* = 48 to 50, Q* = 70) b. Find the total welfare 3. Peak-load pricing Given the following peak demand and off peak demand, Qpeak-PD + 120 Qoffpeak = -2PD + 60 a. If the operational cost for off peak and peak period is $5 and the capital cost is $50, find the optimal pricing mechanism! (PPeak = $55, Poffpeak = $5) b. If the capital cost is $70 instead of $50, find the optimal pricing mechanism! (PPeak = $73.3, Poffpeak = $6.66)
Transcribed Image Text:1. Natural Monopoly Given the inverse supply and inverse demand equation below, 1 -30D + 40 1 Ps= -5QD+30 a. Find the equilibrium without any government intervention (Q* = 21.4, P = 32.9) b. If the market is to be regulated, find the minimum subsidy to get an optimal equilibrium (562.5) 2. Two sided bidding These are the list of bids from electricity producers as well as electricity distribution firms. Electricity producers Electricity distribution Asking price/KWh quantity/KWh Asking price/KWh quantity/KWh 25 35 35 60 35 20 30 15 40 40 $ $ $ $ $ PD = - 0.77 0.36 0.48 0.55 0.68 $ $ $ S $ 0.50 0.38 0.57 0.68 0.44 a. Find the optimal market price and quantity (P* = 48 to 50, Q* = 70) b. Find the total welfare 3. Peak-load pricing Given the following peak demand and off peak demand, Qpeak-PD + 120 Qoffpeak = -2PD + 60 a. If the operational cost for off peak and peak period is $5 and the capital cost is $50, find the optimal pricing mechanism! (PPeak = $55, Poffpeak = $5) b. If the capital cost is $70 instead of $50, find the optimal pricing mechanism! (PPeak = $73.3, Poffpeak = $6.66)
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