Concept Introduction Monopoly : This refers to the condition in a market where there is a single person or company who sells a particular good or service and there is no competitor. In a monopoly, the supplier is free to fix any price since the consumers have no alternative available. Consumer Surplus : This is the surplus occurring due to a difference in the amount that a consumer is willing to pay for a good or service and the amount that is actually paid by the consumer. Producer Surplus : This is the surplus occurring due to a difference in the amount at which a good or service is sold by the producer and the amount at which the producer is willing to sell the good or service. Price Discrimination : This refers to a type of strategy used to fix the price of goods and services. Under this strategy, the monopolist charges a different price for each consumer, which is the maximum price that a consumer is willing to pay.

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 7P

To determine

Concept Introduction

Monopoly: This refers to the condition in a market where there is a single person or company who sells a particular good or service and there is no competitor. In a monopoly, the supplier is free to fix any price since the consumers have no alternative available.

Consumer Surplus: This is the surplus occurring due to a difference in the amount that a consumer is willing to pay for a good or service and the amount that is actually paid by the consumer.

Producer Surplus: This is the surplus occurring due to a difference in the amount at which a good or service is sold by the producer and the amount at which the producer is willing to sell the good or service.

Price Discrimination: This refers to a type of strategy used to fix the price of goods and services. Under this strategy, the monopolist charges a different price for each consumer, which is the maximum price that a consumer is willing to pay.

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1. Case 0) Baseline case Table 1: Power Plant Capacity and Marginal Cost: Case 0 Plant # Energy Source Capacity (MW) MC (S/MWh) 1 Coal 300 45 2 Oil 100 90 3 4 Natural Gas Nuclear 500 50 600 0 (a) Calculate the capacity mix of this market by energy source. (b) Draw a supply curve of this wholesale generation market. Table 2 below shows the demand levels for selected hours of a representative day. We will consider only these four hourly markets for our analysis. Note that the 6 PM demand is the highest demand level of the day. Table 2: Hourly Demand (selected hours) Hour Demand (MWh) 4 AM 500 10 AM 700 2 PM 800 6 PM 1000 (c) Find the market clearing prices and calculate how much electricity each power plant generates in the hourly market (4AM, 10AM, 2PM, and 6PM). (d) Find the average price of electricity (by taking a simple average of hourly prices; [P(4am) + P(10AM) + P(2PM) + P(6PM)]/4).

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 7P

To determine

Concept Introduction

Monopoly: This refers to the condition in a market where there is a single person or company who sells a particular good or service and there is no competitor. In a monopoly, the supplier is free to fix any price since the consumers have no alternative available.

Consumer Surplus: This is the surplus occurring due to a difference in the amount that a consumer is willing to pay for a good or service and the amount that is actually paid by the consumer.

Producer Surplus: This is the surplus occurring due to a difference in the amount at which a good or service is sold by the producer and the amount at which the producer is willing to sell the good or service.

Price Discrimination: This refers to a type of strategy used to fix the price of goods and services. Under this strategy, the monopolist charges a different price for each consumer, which is the maximum price that a consumer is willing to pay.

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Answer 3

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 7P

To determine

Concept Introduction

Monopoly: This refers to the condition in a market where there is a single person or company who sells a particular good or service and there is no competitor. In a monopoly, the supplier is free to fix any price since the consumers have no alternative available.

Consumer Surplus: This is the surplus occurring due to a difference in the amount that a consumer is willing to pay for a good or service and the amount that is actually paid by the consumer.

Producer Surplus: This is the surplus occurring due to a difference in the amount at which a good or service is sold by the producer and the amount at which the producer is willing to sell the good or service.

Price Discrimination: This refers to a type of strategy used to fix the price of goods and services. Under this strategy, the monopolist charges a different price for each consumer, which is the maximum price that a consumer is willing to pay.

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Answer 4

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 8, Problem 7P

To determine