Question: 1. (12 points). The table below presents the short-term marginal cost of electricity generation by different types of energy. Notice that the supply of

1. (12 points). The table below presents the short-term marginal cost of electricity generation by different types of energy. Notice that the supply of electricity varies throughout the day. Maximum Type of electricity Wind Solar Nuclear Coal Gas Oil Marginal cost ($/megawatt hour) $0 $0 $3 $25 $30 $60 Quantity Available 1,000 1,000 1,000 2,000 1,000 5,000 Time this source is available 1:00 a.m. - 11:00 a.m. 9:00 a.m. - 5:00 p.m. No limitations No limitations No limitations No limitations a) At 3:00 a.m. the aggregate demand is inelastically fixed at 800 megawatts. What would the market-clearing price? b) At 10:00 a.m. the aggregate demand is inelastically fixed at 5,200 megawatts. What would the market-clearing price? c) Suppose that at 10:00 a.m. the wind unexpectedly stops. However, industrial suppliers have special contracts that require them to reduce their demand by up to 800 megawatts if the price exceeds $50. What would be the equilibrium price and quantity in the electricity market?

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