E202ProblemSet5.5

E202ProblemSet5.5 - per unit. When electricity costs 10...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
5. Is a company’s producer surplus the same as its profit? (Hint: A company’s total cost is equal to the sum of all marginal costs incurred in producing its output, plus any fixed costs.) 6. In Charlotte, North Carolina, citizens can get their electric power from two sources: a hydroelectric generator and a coal-fired steam generator. The hydroelectric generator can supply up to 100 units of power per day at a constant marginal cost of one cent per unit. The steam generator can supply any additional power that is needed at a constant marginal cost of 10 cents
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: per unit. When electricity costs 10 cents per unit, residents of Charlotte demand 200 units per day. a. Draw the marginal cost curve of electric power production in Charlotte. b. How much should the city charge for electric power? Explain. Should it charge the same price for a family whose power comes from the hydroelectric generator as it does for a family whose power comes from the steam generator? On my honor, as an Aggie, I have neither given nor received unauthorized aid on this assignment. Signature _____________________...
View Full Document

This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

Ask a homework question - tutors are online