Unformatted text preview: lump sum payments to the consumers. Note that this leaves the government with zero tax revenues. Using the information that we developed in class identify the welfare loss of this taxing scheme. Identify the loss in both a production possibility diagram and a supplydemand diagram. Prove all that you have time to. 3. This is a peak load problem. The city of Logan is selling electricity during the afternoons and evenings at 15 cents per kilowatt hour and in the morning at 8 cents. The demand curves are 1 1 250 x p − = and 2 2 175 x p − = , respectively for evenings and mornings. The implicit user cost of capacity is 10 cents per kilowatt hour and the operating cost is 5 cents per kilowatt hour. Is this the efficient set of prices? If not find the efficient set. Is there price discrimination in this set? Explain....
View
Full Document
 Spring '10
 Kutler
 Economics, Microeconomics, Utility, Howard Staunton, p1 x1, p2 x2 Subj

Click to edit the document details