What is the equilibrium price and quantity for poeak and off-peak?

types heat rate fuel cost total capacity CO2 emissions Coal 10 0.5 500 100 Natural Gas 8 2.5 Show more types heat rate fuel cost total capacity CO2 emissions Coal 10 0.5 500 100 Natural Gas 8 2.5 100 0.75 Consider the above table as an electricity generation system for two competitve firms. 1. Draw the competitive supply curve for this portfolio of electricity generators. Hint: This is identical to merit order. 2. Suppose whole sale peak and off-peak electricity demand for a representative hour is given by: Dpeak(P)= 950-20P and Doff-peak(P)= 500-20P where P is in $/MWh and quantity is in MW. Add the two demand curve to your graph of the supply curve. What is the equilibrium price and quantity for poeak and off-peak? 3. What are the infra-marginal rents for each generator for peak and off-peak? Hint: The infra-marginal rent is the short-runprofit per unit output. 4. Suppose that CO2emissions are taxes at some prices per ton. How large would this tax t have to be for the the natural gas generator to be below coal in the merit order? *Note: Units of heat rate: MMBtu/MWh -Fuel Cost in $/MMBtu -Total capacity in MW -CO2 emission (tons/MWh) Show less

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