The above figure illustrates the market for electric power that is served by the one utility in Alberta, Canada

a. If the government did not regulate this utility, what would be the price of a kilowatt hour in this region and how much power would be generated?
b. If the government regulates the utility and chooses an average cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?
c. If the government regulates the utility and chooses a marginal cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?


a. The price would be 12¢ a kilowatt hour and 20 megawatts per hour would be generated.
b. The price would be 8¢ a kilowatt hour and 30 megawatts per hour would be generated.
c. The price would be 4¢ a kilowatt hour and 40 megawatts per hour would be generated.

Economics

You might also like to view...

Autonomous consumption refers to the level of consumption associated with a given level of income

Indicate whether the statement is true or false

Economics

When total utility is at a maximum, marginal utility is

a. zero b. positive c. negative d. one e. infinite

Economics

Which of the following is a reason for using independently pooled cross sections?

A. To obtain data on different cross sectional units B. To increase the sample size C. To select a sample based on the dependent variable D. To select a sample based on the independent variable

Economics

Which issue type of environmental problem is least-easily solved?

A. One that is entirely confined to a single property owned by an individual. B. One that is global. C. One that is entirely confined to a single community. D. One that is entirely confined to a single country.

Economics