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July 12, 2016 ENERGY ECONOMICS M.Sc. 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 ⇒ Question 1 (2 points) – Academic year 2015/16 only Consider a perfectly competitive market. Market demand is given by p(y) = 50 – 4y, where p is the price and y the quantity. (1a) Write the definition of “demand curve facing a single firm”. (1b) Illustrate it on a p vs. y graph for this ideal market, motivating your answer. ⇒ Question 1 (2 points) – Academic year 2014/15 and earlier Consider a perfectly competitive market. (1a) Write the definition of supply curve for a single firm in this ideal market. (2b) Illustrate your answer using a price a p vs. y graph. Motivate your answer. 3 ⇒ Question 2 (3 points) (2a) Write a market demand curve p(y) such that demand elasticity to price, ε, is constant (p is the price and y the quantity). Choose numerical values for the parameters in the market demand function. Now consider a monopolist facing such demand curve, and assume that it has a total cost function TC(y) which only depends on y. (2b) Derive the…