a) listed on bottom of picture
b) what is the short run equilibrium price for electricity on a typical day in baldonia
c) if the average daily price of electricity over the long run is expected to be $12 per unit, how much electricity would be supplied by incubent firms in the market?
d) what is the long run entry price for baldonia electricity market?
PLEASE ANSWER A-D for me ASAP!! thank u so much
Problem 2 (25 points) The market for electric power in Baldonia is perfectly competitive and consists of many price taking firms who generate electricity in one of three types of generating plants: coal-fired "base-load" plants, natural gas-fired plants, and coal-fired "peaking" plants. All plants of a particular type are identical. Their characteristics are described below: Plant type Average variable cost ($ per unit) Total daily fixed cost (thousands of $ per day) Total daily capital charge (thousands of $ Number of plants Daily capacity of plant (thousands of units per day) per day) 6 22 2 60 Natural gas fired 1 30 108 3 30 Coal fired base-load 10 8 50 N 15 Coal fired peaking 0 Average variable costs are constant for any volume of output up to full capacity operation. Any new plant that might be built would be a natural gas-fired plant with cost and operating characteristics identical to natural gas-fired plants given in the table above. There are an unlimited number of entrants who could come in to this industry. Once built, a plant lasts forever, unless it is permanently closed down. A plant has zero salvage value. I o Market demand on a typical day is given by D(P) = 160 - 10P, where the price Pis measured in dollars per unit and demand is measured in thousands of units per day. a) (5 points) What is the short-run market supply of electricity if the market price is $7 per unit (explain in the space below)? Problem 2 (25 points) The market for electric power in Baldonia is perfectly competitive and consists of many price taking firms who generate electricity in one of three types of generating plants: coal-fired "base-load" plants, natural gas-fired plants, and coal-fired "peaking" plants. All plants of a particular type are identical. Their characteristics are described below: Plant type Average variable cost ($ per unit) Total daily fixed cost (thousands of $ per day) Total daily capital charge (thousands of $ Number of plants Daily capacity of plant (thousands of units per day) per day) 6 22 2 60 Natural gas fired 1 30 108 3 30 Coal fired base-load 10 8 50 N 15 Coal fired peaking 0 Average variable costs are constant for any volume of output up to full capacity operation. Any new plant that might be built would be a natural gas-fired plant with cost and operating characteristics identical to natural gas-fired plants given in the table above. There are an unlimited number of entrants who could come in to this industry. Once built, a plant lasts forever, unless it is permanently closed down. A plant has zero salvage value. I o Market demand on a typical day is given by D(P) = 160 - 10P, where the price Pis measured in dollars per unit and demand is measured in thousands of units per day. a) (5 points) What is the short-run market supply of electricity if the market price is $7 per unit (explain in the space below)
