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

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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
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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 _____________________...
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