1. Explain how the impact of a price increase on electricity consumption depends on the price elasticity of demand

2. The price elasticity of the Indian demand for electricity has been estimated to be -0.65 among residential users and -0.45 among industrial users.If these elasticities apply to China as well, how will the impact of a price increase be spread between residential as compared with industrial users?

3. Many Chinese organizations ignore the market system.For instance, they borrow money from banks and refuse to repay, thus creating "bad debts" for lenders.Likewise, they might consume electricity without bothering to pay the power supplier.Do such organizations cause the demand for electricity to be more or less price elastic?

4. Suppose that the Chinese government regulates the electricity industry through marginal cost pricing.

a.How does the contract price of thermal coal affect an electric power plant's marginal cost?

b. b. If the contract price were raised to 99% of the spot market price, how would that affect the electric power plant's production?