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July 3, 2015 ENERGY ECONOMICS Master of Science in Energy Engineering Duration: 2 hours and 30 minutes During the test students are not allowed to use class notes or textbooks or to leave the classroom Mark the exam folder with your Name, Last Name and Politecnico di Milano Id. Number At the end of the test hand over only the exam folder Name Last Name Id. Number Instructions and grading system Read the questions carefully and provide answers to all the points raised in each question. It is important to use a correct and appropriate terminology for all economic and technical terms. Remember to define all variables and parameters used in your answers. A full score will be awarded only if the answer is correct and complete. A partial score will be awarded only if the partial response, albeit incomplete, does not contain any errors. 2 1) A firm in a competitive market has a cost function given by TC = 10y2 + 1000. What is its supply curve? Discuss your answer for market prices lower than 200. Illustrate your answer with a graph where you depict the firm supply curve, average costs and average variable costs. (4 points) 3 2) A profit maximizing monopolist is operating at an output level where |ε| >1. The government imposes an environmental tax on the quantity produced, equal to 10 € per unit of output. If the demand curve facing the monopolist is linear, how much does the price rise? For simplicity assume that the monopolist has constant marginal costs. Illustrate your answer with a graph. (4 points) 4 3) You observe that there is only one firm in a market. Can you always conclude that there will be monopoly inefficiencies? Briefly motivate your answer. (2 point) 4) In a multiproduct context, a fully informed regulator is considering to set a uniform price per unit of…