Please provide graphs, calculations and explanations as necessary. (This is a complete question and no graphs were given in the instructions. If I have the graphs I would know how to do and I would not ask for help from here :)
1. (23 marks) This question addresses policies to reduce carbon emissions in the generation of electricity. Brown power refers to electricity generation from fossil fuels, which results in carbon emissions. Green power refers to renewable electricity generation that generates no carbon emissions. a. (2 marks) Suppose the marginal cost of producing brown power is given as MCB : 3'13 while the marginal cost of green power is MCG : 69G , where 9'3 and qG refer to the quantities of brown and green power, respectively. The demand for electricity is P: 1202Q, where P is the price of electricity in 5 per kw-hr, and Q is the total quantity electricity consumed, where 93 + 5],, : Q . 0 Determine the algebraic expression for the marginal cost of the total power supply, including both brown and green power. 0 Determine the equilibrium price and quantity of power. 0 Determine how much power will be generated by green sources and how much by brown sources. b. (2 marks) Sketch the following three graphs: Figure 1a shows the marginal cost curve of green power, Figure 1b shows the marginal cost of brown power, and Figure 1c shows the total marginal cost curve as well as the demand curve. Indicate the quantity of power generated from both green and brown power sources on your graphs. c. (2 marks) Suppose a tax of $40 per unit is applied to brown power. 0 Calculate the new equilibrium price and quantity of brown, green and total power. 0 Show the impact of this tax in the figures created in part b. In particular, show the marginal cost curve for brown power that includes the tax, the total marginal cost curve including the tax, and the impact on P, Q, qg, and (13.. d. (2 marks) Now suppose a subsidy of $40 per unit is applied to green power. 0 Calculate the new equilibrium price and quantities of brown, green and total power. 0 Redraw your figures from part b, and include the MC of green power less the subsidy. Show the impact on P, QT, (15, and (13 of the subsidy
