Question

The Genetron Electric Company provides electric power service to a three state region in the US. The annual demand for electric power in this region is Q = 4500 - 100P where quantity (Q) is measured in millions of kilowatt hours (kWh) and the price (P) is cents per kWh. The firm operates in a decreasing cost industry. 6.1 If the firm's marginal cost curve crosses the demand curve at P = 4 (i.e., 4 cents per kWh), what is the quantity demanded at this price? [1] 6.2 Why wouldn't the firm want to operate under marginal cost pricing? [2] 6.3 If the firm's average cost curve crosses the demand curve at P = 5, what is the quantity demanded at this price? [1] 6.4 What are the firm's profits under average cost pricing? [1] 6.5 Suppose Genetron uses a block pricing scheme with prices P1 = 15, P2 = 10, and P3 =AC. What quantity levels are associated with the first, second, and third blocks of annual electricity demanded? [3]

          The Genetron Electric Company provides electric power service to a three state region in the US.  The annual demand for electric power in this region is Q = 4500 - 100P where quantity (Q) is measured in millions of kilowatt hours (kWh) and the price (P) is cents per kWh. The firm operates in a decreasing cost industry.
6.1 If the firm's marginal cost curve crosses the demand curve at P = 4 (i.e., 4 cents per     kWh), what is the quantity demanded at this price?  [1]
6.2 Why wouldn't the firm want to operate under marginal cost pricing? [2]
6.3 If the firm's average cost curve crosses the demand curve at P = 5, what is the quantity demanded at this price?  [1]
6.4 What are the firm's profits under average cost pricing? [1]
6.5 Suppose Genetron uses a block pricing scheme with prices P1 = 15, P2 = 10, and P3 =AC.  What quantity levels are associated with the first, second, and third blocks of annual electricity demanded? [3]

Added by Anita M.

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