Reference no: EM133552248

Question: The price is in cents per kilowatt hour (kWh), and the quantities are in millions of kilowatt hours. The utility does not operate at prices less than 12 cents per kWh.

a. Using graph paper and a ruler, or a computer spreadsheet or presentation program, carefully graph and label the supply curve for electricity.

b. On the same graph,d r a w and label the demand curve for electricity.

c. What is the equilibrium r I c e of electricity? The equilibrium quantity? Label this point on your graph.

d. For 16 cents per kWh, what is the quantity supplied? What is the quantity demanded? What is the relationship between the
quantity supplied and the quantity demanded? What term do economists use to describe this situation?

e. For 13 cents per kWh, what is the relationship between the quantity supplied and the quantity demanded? What term do economists use to describe this situation?

f. Sometimes, cities experience "blackouts," in which the demands on the utility are so high relative to its capacity to produce electricity that
the system shuts down, leaving everyone in the dark. Using the analysis that you have just completed, describe an economic factor that could make blackouts o r e likely to occur.