Time Limit: 0300:00 Sub Test: Exam 2 This Test: 60 pts This Question: 1 pt 1of60

Question

Time Limit: 0300:00 Sub Test: Exam 2 This Test: 60 pts This Question: 1 pt 1of60 (0complete) Table 1 shows the demuand schedule tor elechricitly from a coal buming utilty ets Table 2 shows the utility's cost of producing electricity and the extemal cost of the Table 1 Quantity demanded Price ilowatts per day 500 400 300 200 100 cents per kilowatt) pollution created With no pollution centrol calculate the quantity of electricily produced, the pekce of electriciy, and the marginal estemal cost ef the pollution generated With no pollution cortel,the quntty of okectricly peodaceday The price of electrichy iscents a klowatt The marginal external costofthe polk tion generated iscents a kilowatt 12 16 20 24 Table 2 Quantity Marginal Marginal per deyl 100 300 400 500 10 Enter your answer in each of the answer boxes DOaL

Explanation / Answer

Solution:

With no pollution control the total qty of electricity produced is 1500 kw.

we just have to add up the total qty of electricity demanded , without any deduction, as there is no pollution control, so the total qty of electricity produced is (500+400+300+200+100) = 1500

2)The total price would be (100*20+200*16+300*12+400*8+ 500*4)= 14000 cents.

14000 cents = 14000/100 = $ 140

the price of electricity is 14000 / 1500 = 9.33 cents per kilowatt

3)The marginal external cost of pollution is 7.33 cents per kilowatt.

in table 2 qty kilowatts per day is given ,and against the kilowatts produced, the marginal external cost is also given.

so the calculation of total marginal external cost = (100*2 + 200*4 + 300*6 + 400*8 + 500*10)= 11000 cents.

the total qty of electricity produced , as calculated from table 1 was 1500 kilowatts.

so the marginal external cost per kilowatt is 11000/ 1500 = 7.33 cents

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