You are in charge of strategic pricing department for a national electricity company (monopoly). According to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are in charge of strategic pricing department for a national electricity company (monopoly). According to past calculations the daily demand for electricity is based on the following equation: Qlectricity=f(electricity Income consume Pater) According to past research this relationship can be numerically defined as follows: Pelectricity + 0.4* Income consumer-500 *P water Qlectricity = 500-1000 *P 1. Assume that the average consumer income is 10000, the price of electricity is 2, and the price of water is 1. Find the own-price, income, and cross-price elasticities for the average consumer. Discuss your findings. 2. Draw the demand graph for the average consumer (Income-10000) when price of water is 1. State under which conditions the demand is elastic or inelastic or unit elastic. 3. Draw the Marginal Revenue graph for the average consumer (Income-10000, Water Price=1). If the marginal cost of electricity production is constant at 1, what be optimal production level to maximize profits? What will be the price charged to average consumer? Find the Consumer Surplus, Producer Surplus, and Economic Surplus under monopoly. Do the same for competitive market. You are in charge of strategic pricing department for a national electricity company (monopoly). According to past calculations the daily demand for electricity is based on the following equation: Qlectricity=f(electricity Income consume Pater) According to past research this relationship can be numerically defined as follows: Pelectricity + 0.4* Income consumer-500 *P water Qlectricity = 500-1000 *P 1. Assume that the average consumer income is 10000, the price of electricity is 2, and the price of water is 1. Find the own-price, income, and cross-price elasticities for the average consumer. Discuss your findings. 2. Draw the demand graph for the average consumer (Income-10000) when price of water is 1. State under which conditions the demand is elastic or inelastic or unit elastic. 3. Draw the Marginal Revenue graph for the average consumer (Income-10000, Water Price=1). If the marginal cost of electricity production is constant at 1, what be optimal production level to maximize profits? What will be the price charged to average consumer? Find the Consumer Surplus, Producer Surplus, and Economic Surplus under monopoly. Do the same for competitive market.
Expert Answer:
Answer rating: 100% (QA)
solution is given below Ans 1 Q 500 1000PE 04Income 500PW Substituting t... View the full answer
Related Book For
Statistical Reasoning for Everyday Life
ISBN: 978-0321817624
4th edition
Authors: Jeff Bennett, Bill Briggs, Mario F. Triola
Posted Date:
Students also viewed these economics questions
-
This exercise is based on the following data set. a. Compute the ordinary least squares regression of Y on a constant, X1, and X2. Be sure to compute the conventional estimator of the asymptotic...
-
The daily demand for pizzas is Qd = 750 - 25P, where P is the price of a pizza. The daily costs for a pizza company initially include $50 in fixed costs (which are avoidable in the long run but sunk...
-
The daily demand for pizzas is Qd = 750 - 25P, where P is the price of a pizza. The daily costs for a pizza company initially include $50 in fixed costs (which are avoidable in the long run but sunk...
-
Write a program that reads in the x - and y - coordinates in Cartesian space for the endpoints of a line segment and then determines if the line segment is parallel to the y - axis. Hint: a line is...
-
Operating expenses are subdivided between selling expenses and general and administrative expenses when a multiple-step income statement is prepared. Identify each of the following items as a selling...
-
1. Which characteristics of excellence were lacking in this task force? 2. Which characteristics of excellence were evident in this task force? 3. How would you assess Kim as a leader? 4. What...
-
The Foreign Corrupt Practices act can levy fines of more than five hundred million against companies our size that do not eliminate corruption in their operations abroad. Can you understand why the...
-
On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month: a. Sharon Matthews transferred cash from a personal bank account to an...
-
why is cardinality important to a relational database model? How is it usually defined and what types of GIS analysis operations is it particularly important to? Provide specific examples in your...
-
On May 2, 1987, Hannah acquired residential real estate for $450,000. Of the cost, $100,000 was allocated to the land and $350,000 to the building. On August 20, 2015, the building, which then had an...
-
To spruce up his wardrobe, Jack pays $700 to a tailor in Havana for a regular supply of new pantaloons. The tailor measures Jack and delivers twenty pair of black pants. He next wants to purchase 15...
-
How will you react to the resorts reputation of rough starts, but it gets better after you've been working there for a while?
-
How does critically analyzing diversity add value to how you interact with people and understand social or global issues/events?
-
What is infinite loading and how does it impact Capacity Requirements Planning (CRP) and MRP? How is Distribution Requirements Planning (DRP) used to enhance supply chains?
-
What do we mean by "sensitivity analysis"? What two basic questions can we answer using sensitivity analysis?
-
Discuss the following terms along with examples Upward delegation. Sideward delegation. Downward delegation.
-
How much did Vanessa deposit every month in her savings account if she had $14,000 after 30 month-end deposits? The money in her savings account was growing at 3.96% compounded monthly. $0.00 Round...
-
If 2 5 9 - k 5 8 = 2 5 8 , what is the value of k?
-
The following values are numbers of motor vehicle deaths in the United States for years beginning with 1980. The data are arranged in order by row. Construct a time-series graph and then determine...
-
The chest deceleration data (in g's) from the tests described in Exercise 13 are given below. Use a 0.05 significance level to test the null hypothesis that the different weight categories have the...
-
Percentage of scores between 76 and 108 The normal distribution of IQ scores, which has a mean of 100 and a standard deviation of 16. Use Table 5.1 (on page 175) to find the indicated quantities, for...
-
W hat is diauxic growth? Explain the roles of cAMP and CAP in this process.
-
What is antisense RNA? How does it affect the translation of a complementary mRNA?
-
List and describe three general ways that the functions of transcription factors can be modulated.
Study smarter with the SolutionInn App