A typical consumer's monthly demand for kilowatt hours (kwh) of electricity is given by D(p) =...

 

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A typical consumer's monthly demand for kilowatt hours (kwh) of electricity is given by D(p) = 740.00-2900.00p. Due to advances in renewable energy that have reduced barriers to entry, the supply of electricity can be considered as a perfectly competitive market, with a horizontal supply curve at price $0.08 per kwh. Part 1 (2 points) What is the quantity consumed by a typical consumer in equilibrium? Suppose that Congress wants to promote renewable energy and thus proposes a subsidy to consumers of $0.02 per kwh. What is the equilibrium quantity with the subsidy? Part 2 What percentage of the gain from the subsidy goes to sellers? What is the deadweight loss from the subsidy? A typical consumer's monthly demand for kilowatt hours (kwh) of electricity is given by D(p) = 740.00-2900.00p. Due to advances in renewable energy that have reduced barriers to entry, the supply of electricity can be considered as a perfectly competitive market, with a horizontal supply curve at price $0.08 per kwh. Part 1 (2 points) What is the quantity consumed by a typical consumer in equilibrium? Suppose that Congress wants to promote renewable energy and thus proposes a subsidy to consumers of $0.02 per kwh. What is the equilibrium quantity with the subsidy? Part 2 What percentage of the gain from the subsidy goes to sellers? What is the deadweight loss from the subsidy?

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Part 1 To find the equilibrium quantity consumed by a typical consumer we need to equate the demand ... View the full answer