The following questions refer to the paper by Boomhower and Davis "Measuring Inframarginal Participation in

Energy Efficiency Programs"

a. How does the following figure illustrate how subsidizing energy efficiency purchases (when everyone

qualifies for the subsidy) leads to payments to consumers who would have purchased the energy

efficiency item without the subsidy.

Price Private Marginal Cost C A B Social Marginal Benefit Private Marginal Benefit Q* Number of adopters Fig 1. The market for an energy-efficient technology.(b) Refrigerators 2.5 Subsidy falls from $170 to $110 C - Subsidy falls from $110 Minimum to $30 to participate Subsidy falls Percentage of Households Participating from $30 to $0 LO . O 0 50 100 150 200 250 300 Non-Summer Average Historical Electricity Consumption (KWh)