01 Jun Question Problem 3.4 The operator of a centralized market
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.
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