ECO- The operator of a centralized market for electrical energy has received the bids

ECO- The operator of a centralized market for electrical energy has received the bids

Question

Problem 3.4 The operator of a centralized market for electrical energy has received the bids shown in the table below for the supply of electrical energy during a given period.

Company

Amount (MWh)

Price ($/MWh)

red

100

12.5

Red

100

14

Red

50

18

Blue

200

10.5

Blue

200

13

Blue

100

15

Green

50

13.5

Green

50

14.5

Green

50

15.5

a. Build the supply curve

b. Assume that this market operates unilaterally, that is, that the demand does not bid and is represented by a forecast. Calculate the market price, the quantity produced by each company and the revenue of each company for each of the following loads: 400 MW, 600 MW, 875 MW.

c. Suppose that instead of being treated as constant, the load is represented by its inverse demand curve, which is assumed to have the following form:

Where D is the demand, L is the forecasted load and (pie sign) is the price. Calculate the effect that this price sensitivity of demand has on the market price and the quantity traded.