Reference no: EM13740973
Price taking consumers’ receive a benefit from consuming electricity Q, according to the following function:
B(Q)= -Q^2+2500Q.
A single vertically integrated utility (VIU) has a cost function given by:
C(Q)= 0.4Q^2+50Q+306250.
The VIU has convinced the public utility commission (PUC) that it is a natural monopoly and thus it has been granted an exclusive franchise to produce electricity.
At the most recent rate-hearing, the PUC established a target price based on rate of return regulation. During the hearing, the VIU claimed that its rate-base was $4,875,000 and that the market rate of return it should be allowed should be 10%. It provided receipts to the PUC showing expenses of $262,500. Suppose the PUC has complete knowledge of market demand.
What is the competitive equilibrium in the absence of rate of return regulation?
What is the monopoly equilibrium in the absence of rate of return regulation?
What is the target price set as a result of the regulatory hearing? Use the quantity from part a to calculate.
What is the monopoly equilibrium under the rate of return regulation?
What is the change in consumer surplus from the rate of return regulation relative to the competitive equilibrium? Relative to the no regulation monopoly equilibrium?
What is the change in producer surplus from the rate of return regulation relative to the competitive equilibrium? Relative to the no regulation monopoly equilibrium?
What is the change in total welfare from the rate of return regulation relative to the competitive equilibrium? Relative to the no regulation monopoly equilibrium?
The government provided the monopoly franchise under the assumption that the VIU was a natural monopoly. Was their assessment correct? Did society gain or lose because of the government’s decision? How much did they gain or lose? Please provide detailed reasoning for all three answers.
|
Five decisions making process
: For the course project, you will develop a Diversity Management Proposal that uses the five decisions making process (listed below) to identify a problem or opportunity related to a diversity issue facing your company or future employer:
|
|
Health insurance is offered at a community rated premium
: Describe the problem of “adverse selection” when health insurance is offered at a community rated premium? Define the term “community rated premium” as well. Is it possible to address the problem of adverse selection by increasing the premium level? ..
|
|
Describe financial standing in past several year of company
: Company research that will contain the following bulleted information- General company info, Financial standing in the past several years
|
|
Does jackson deserve his position in history as a president
: Does Jackson deserve his position in history as a great president or King Andrew, as his opponents named him? Explain your position by addressing a particular action or decision that was part of his presidency.
|
|
Monopoly equilibrium in absence of rate of return regulation
: The VIU has convinced the public utility commission (PUC) that it is a natural monopoly and thus it has been granted an exclusive franchise to produce electricity. What is the competitive equilibrium in the absence of rate of return regulation? What ..
|
|
Explain the impact of depictions of media violence
: Find one or two specific texts within the media type assigned to your group that demonstrate the impact of depictions of media violence.
|
|
What will be the value of investment
: If a nurse deposits $1,000 today in a bank account and the interest is compounded annually for 12 percent, what will be the value of this investment: Five years from now
|
|
The distribution of consumer expenditures
: According to the Bureau of Labor Statistics, the distribution of consumer expenditures. If the negative income tax rate is set at 50 percent and the income floor is set at $5,000, a family that earns $3,000 would have a total income (including the in..
|
|
Ways that skullcandys size and growth rate influence
: What are some of the ways that Skullcandy's size and growth rate influence its development process
|