The energy company Evigel has a price structure where as a customer you pay 10 re per kilowatt hour (kwt) for the first 1000 kwt per week and 5 re for all consumption in addition to the first 1000 kwt. Consumer U. El-baek has a weekly budget of DKK 400. Assume that he can buy electricity and another "composite good" with a price normalized to 1.

1. Show U. El-baek's budget constraint and illustrate with indifference curves his optimum electricity consumption at this price structure.

The government is now ordering energy companies to restructure their pricing structure so that they instead animate consumers to save electricity. Evigel therefore decides that the price structure should instead be the following: 5 re per kilowatt hour (kwt) for the first 1000 kwt per week and 10 re for all consumption in addition to the first 1000 kwt.

1. Illustrate how this conversion could conceivably affect U. El-baek's electricity consumption. (I need the answer for this one)

Evigel is considering a third pricing model, paying 5 re for the first 1000 kwt. If the consumption exceeds 1000 kwt, the price changes to 10 re per kwt for the whole week's consumption.

1. Show U. El-baek's budget constraint with this pricing structure.

1. Which of the 3 examples of price structures will have the most positive climate effects? Consider the distributional consequences of different price structures as well as other ways of regulating consumption if the purpose is to reduce energy consumption.