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.
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