Problem 1: TRUE/FALSE questions about electricity markets

a. During off-peak hours, incentives to exercise market power diminish. (TRUE/FALSE)

b. In a competitive electricity market, higher natural gas prices do not lead to increased short-run profits for nuclear plants because every plant is a price taker. (TRUE/FALSE)

c. When capacity constraint is the main driver of scarcity prices in electricity markets, additional investment can alleviate the scarcity prices. (TRUE/FALSE)

d. Real-time pricing of electricity makes demand more elastic, which helps to alleviate scarcity prices. (TRUE/FALSE)

e. Establishing a wholesale electricity market will always lower the market's electricity prices because only the power plants with lower costs can survive competition. (TRUE/FALSE)