MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Question
Chapter 8.W, Problem 4QE
(a)
To determine
The effects of an increase in supply according to the elasticity of
(b)
To determine
The effect of a government guarantee of the price in each case explained in Part (a).
(c)
To determine
The most preferable combination among the four.
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3. Case 2) Coal plants exit, and Solar generation enters the market
Now, let's consider a scenario where the coal power plant (#1) shuts down and exits the market,
and a solar generation facility is constructed. The capacity of the solar generation facility is the
same as the coal power plant that went out of business. The generation capacities of this market
are shown below, along with their MC.
Table 3: Power Plant Capacity and Marginal Cost: Case 2
Plant #
Energy Source
Capacity (MW)
MC (S/MWh)
2
Oil
100
90
3
Natural Gas
500
50
4
Nuclear
600
0
5
Solar
300
5
Note that the solar plant (#5) can generate electricity only from 7 AM until 5PM. During these
hours, the plant can generate up to its full capacity (300 MW) but cannot generate any when
unavailable.
(a) Draw a supply curve for each hourly market (4AM, 10 AM, 2PM, 6PM).
(b) Find the market clearing prices and calculate how much electricity each power plant
generates in the hourly market (4AM, 10AM, 2PM, and 6PM).
(c) Find the…
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To analyze consumer spending, you must review the macroeconomic indicators of Personal Consumption Expenditures (PCE) and Retail Sales over the past year.
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Personal Consumption Expenditures (PCE) measure the value of household goods and services consumed and are a key indicator of consumer spending.
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4. Case 3) Electricity demand increases due to increased EV adoption
We will continue using the Case 2 supply curve (with the solar plant in operation) for this
analysis. Suppose that electricity consumption from electric vehicles (EV) increases
significantly. Consequently, electricity demand in the wholesale market increases at every hour.
The new demand levels are shown in Table 5 below.
The market operator has backup power plants (using natural gas) ready, with a total capacity of
300 MW and a MC of $100/MWh.
Table 5: Hourly Demand (selected hours)
Hour
Demand (MWh)
4 AM
800
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1000
...
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1100
...
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(a) Find the market clearing prices and calculate how much electricity each power plant
generates in the hourly market (4AM, 10AM, 2PM, and 6PM). Is there a specific hourly
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Chapter 8 Solutions
MICROECONOMICS
Ch. 8.1 - Prob. 1QCh. 8.1 - Prob. 2QCh. 8.1 - Prob. 3QCh. 8.1 - Prob. 4QCh. 8.1 - Prob. 5QCh. 8.1 - Prob. 6QCh. 8.1 - Prob. 7QCh. 8.1 - Prob. 8QCh. 8.1 - Prob. 9QCh. 8.1 - Prob. 10Q
Ch. 8.W - Prob. 1QECh. 8.W - Prob. 2QECh. 8.W - Prob. 3QECh. 8.W - Prob. 4QECh. 8.W - Prob. 5QECh. 8.W - Prob. 6QECh. 8.W - Prob. 7QECh. 8.W - Prob. 8QECh. 8.W - Prob. 9QECh. 8.W - Prob. 10QECh. 8.W - Prob. 11QECh. 8.W - Prob. 12QECh. 8.W - Prob. 13QECh. 8.W - Prob. 14QECh. 8.W - Prob. 1QAPCh. 8.W - Prob. 2QAPCh. 8.W - Prob. 3QAPCh. 8.W - Prob. 4QAPCh. 8.W - Prob. 5QAPCh. 8.W - Prob. 1IPCh. 8.W - Prob. 2IPCh. 8.W - Prob. 3IPCh. 8.W - Prob. 4IPCh. 8.W - Prob. 5IPCh. 8.W1 - Prob. 1QCh. 8.W1 - Prob. 2QCh. 8.W1 - Prob. 3QCh. 8.W1 - Prob. 4QCh. 8.W1 - Prob. 5QCh. 8.W1 - Prob. 6QCh. 8.W1 - Prob. 7QCh. 8.W1 - Prob. 8QCh. 8.W1 - Prob. 9QCh. 8.W1 - Prob. 10QCh. 8 - Prob. 1QECh. 8 - Prob. 2QECh. 8 - How would an economist likely respond to the...Ch. 8 - Prob. 4QECh. 8 - Prob. 5QECh. 8 - Prob. 6QECh. 8 - Prob. 7QECh. 8 - Prob. 8QECh. 8 - Prob. 9QECh. 8 - Prob. 10QECh. 8 - Prob. 11QECh. 8 - Prob. 12QECh. 8 - Prob. 13QECh. 8 - Prob. 14QECh. 8 - Prob. 15QECh. 8 - Prob. 16QECh. 8 - Prob. 17QECh. 8 - Prob. 18QECh. 8 - Prob. 19QECh. 8 - Prob. 20QECh. 8 - Prob. 21QECh. 8 - Prob. 22QECh. 8 - Prob. 23QECh. 8 - Prob. 24QECh. 8 - Prob. 1QAPCh. 8 - Prob. 2QAPCh. 8 - Prob. 3QAPCh. 8 - Prob. 4QAPCh. 8 - Prob. 5QAPCh. 8 - Prob. 1IPCh. 8 - Prob. 2IPCh. 8 - Prob. 3IPCh. 8 - Prob. 4IPCh. 8 - Prob. 5IPCh. 8 - Prob. 6IPCh. 8 - Prob. 7IPCh. 8 - Prob. 8IPCh. 8 - Prob. 9IPCh. 8 - Prob. 10IP
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