University of California, Davis
ECN 101
Problem Set 4
Answer to Problem 1:
a) The formula for the present discounted value today (in year 0) of labor
income in a particular future year t is given by
)t
(
(1 + g)t
1+g
.
(1)
w0
= w0
(1 + R)t
1+R
ar stu
ed d

UC Davis
Prof. Katrina Jessoe
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NAME:
SECTION YOU ATTEND:
Quiz 1 Solutions: Peak Load Pricing For Electricity
Imagine that the electricity market in the city of Davis is moving from uniform pricing to
1
P
16 P P in peak
rate of time pricing. Demand

UC Davis
Prof. Katrina Jessoe
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Problem Set 5 Solutions
1. Groundwater Subsidy
a. As usual, the economically efficient price and quantity are at the intersection of the
marginal benefit and marginal cost curves. Marginal benefits and marginal costs

UC Davis
Prof. Katrina Jessoe
1. Franks Fans
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Problem Set 1
Due in class on April 7
Franks fans is the only supplier of fans in and around Davis. Summer is approaching in Davis
4
and the temperature is heating up. Demand for fans is given by = 40 a

UC Davis
Prof. Katrina Jessoe
1. Strategic Competition
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Problem Set 2
Due in class on April 21
Suppose Toyota and Honda both plan to develop a new all-electric car, with no comparable
counterpart on the market. If one firm enters the market, it wil

UC Davis
Prof. Katrina Jessoe
ARE 146
Problem Set 4
Due in class on May 26
1. Natural Monopolies and Pricing
C 800 + 4Q . Market demand is =
Q 160 4 P .
Consider a natural monopoly with total costs =
a. If price is set to marginal cost, what are the monop

UC Davis
Prof. Katrina Jessoe
1. Market Failures:
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Problem Set 5
Due in class on June 2
Suppose that the town of Acme has only one water source a groundwater aquifer. The demand
Q
P(=
Q) 250
2 , where Q is the quantity of water demanded in acre-fe

UC Davis
Prof. Katrina Jessoe
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Case Study: Homework # 3
Due in class on May 12
Please read the Case Study from Kennedy School of Government entitled Aguas de Cartagena: The
Privatization of Water in Cartagena, Columbia. The case study will be poste

Managerial Economics
Katrina Jessoe
UC Davis
ARE 146
The Time Value of Money: Present Value Calculations and Discounting
When policy alternatives have streams of benefits and costs stretching over a period of many
years, this poses a problem, because we a

Natural Monopoly Regulation and Electricity
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Business, Government Regulation and Society
Prof. Katrina Jessoe
1
Retail Pricing in Electricity Markets
Marginal costs of supply vary dramatically
Electricity not storable; capacity to meet peak deman

Lecture 1: Introduction to Government,
Regulation of Business and Society
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Government Regulation of Business
Prof. Katrina Jessoe
1
Plan for Todays Lecture
Course overview
Assignments and grading
Efficiency of competitive markets
Market failure

Lecture 3: Price and Quantity Competition
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Business, Government Regulation and Society
Prof. Katrina Jessoe
1
Plan for Todays Lecture
Nash Equilibrium
Prisoners dilemma
Strategic form of a game
Oligopoly Theory
Cournot: competition in quantity

Lecture 4: Oligopoly, Collusion and Antitrust
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Business, Government Regulation and Society
Prof. Katrina Jessoe
1
Plan for Todays Lecture
Finish up with models of price and quantity
competition
Collusion and cheating
2
Highlights of Collusion
Co

UC Davis
Prof. Katrina Jessoe
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NAME:
SECTION YOU ATTEND:
Quiz: DWL from Negative Externality
Suppose that demand for electricity is given by () = 400 , where Q is the quantity
kilowatt hours demanded and P is the price of electricity. The marginal

UC Davis
Prof. Katrina Jessoe
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NAME:
SECTION YOU ATTEND:
Quiz: Negative Externality
*This quiz will also serve as one of the three random quizzes*
Suppose that demand for electricity is given by () = 400 , where Q is the quantity
kilowatt hours dem

UC Davis
Prof. Katrina Jessoe
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Problem Set 1 Solutions
Due in class on April 8
1. Franks Fans
a. A monopolist maximizes profits by equating marginal revenue and marginal cost. Inverse
= 30
demand for Franks fans is P
3
Q . Total revenue from the s

UC Davis
Prof. Katrina Jessoe
ARE 146
Problem Set 4
Due in class on May 26
1. Natural Monopolies and Pricing
Consider a natural monopoly with total costs C = 800 + 4Q . Market demand is Q = 160 4 P .
a. If price is set to marginal cost, what are the monop

UC Davis
Prof. Katrina Jessoe
ARE 146
Practice Problems Midterm Solutions
Examples of Conceptual Questions:
1. Imagine a market is characterized by a dominant firm and a competitive fringe.
Explain the role the competitive fringe plays in the ability of t

ARE 146 Practice Midterm Questions
1. Imagine a market is characterized by a dominant firm and a competitive
fringe. Explain the role of the competitive fringe plays in the ability of the
dominant firm to exercise market power.
a. Competitive fringe usual

UC Davis _ _ . , - ' AR5145
: Prof. Katrina Jessoe
Final Examination
Sprillg2016-
Instructions
This is a closed-book, closed-notes exam. You may use a non-graphing calculator and a ruler. You
will use two blue books for the exam. Number the blue books 1

UC Davis
Prof. Katrina Jessoe
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Practice Problems Midterm
To prepare for the midterm, I recommend going over the problem sets, practice problems provided
in lecture and the lecture slides. These materials should serve as a study guide.
Examples of C

UC Davis
Prof. Katrina Jessoe
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Practice Problems Final
1. Natural Monopolies and Pricing
C 400 + 2Q . Market demand is
Consider a natural monopoly with total costs=
Q
= 80 2 P .
a. If price is set to marginal cost, what are the monopolists output a

UC Davis
Prof. Katrina Jessoe
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Final Examination Solutions
Spring 2016
PART I: Short Answer
1. a. Flat retail electricity prices would be efficient if the marginal cost or wholesale cost to
supply electricity was also flat. However, as discussed in

UC Davis
Prof. Katrina Jessoe
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Practice Problems Midterm Solutions
Examples of Conceptual Questions:
1. Imagine a market is characterized by a dominant firm and a competitive fringe.
Explain the role the competitive fringe plays in the ability of t

UC Davis
Prof. Katrina Jessoe
ARE 146
Practice Problems
Fall 2013
1. Natural Monopolies and Pricing
Consider a natural monopoly with total costs=
C 400 + 2Q . Market demand is
Q
= 80 2 P .
a. If price is set to marginal cost, what are the monopolists outp

Prof. Katrina Jessoe
UC Davis
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MIDTERM SOLUTIONS SPRING 2010
PART I: Short Answer and Multiple Choice Questions
1.
a. The 5-firm concentration ratio equals the share of total industry sales for the five
largest firms. For industry X, this amounts t

Lecture 5:
Market Structure and Strategic Competition
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Business, Government Regulation and Society
Prof. Katrina Jessoe
1
Plan for Todays Lecture
Markets and concentration
Scale economies and barriers to entry
Dominant firm theory
2
What is a ma

Background to Electricity Deregulation and
California Electricity Crisis (Partial Notes)
*Borrowed from Steve Puller
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Business, Government Regulation and Society
Prof. Katrina Jessoe
1
Outline for Today
Off-peak and peak electricity pricing exampl