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September 25, 2015 ENERGY ECONOMICS Master of Science in Energy Engineering Duration: 2 hours 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) Technology is one aspect that determines the level of competition in a market. Explain why and illustrate your answer with a numerical example and appropriate graphical representation. (4 points) 3 2) A fully informed regulator observes that the firm has declining average costs over the full range of outputs and that demand is linear. Illustrate the expected outcomes in terms of price, quantity, consumer and producer surplus, and firm’s profits in the following three cases: (i) unregulated monopoly with blockaded entry; (ii) first best solution; (iii) second best solution. Illustrate your answer with graphs. (3 points) After careful consideration, the regulator imposes a discriminatory two part tariff scheme. Explain why this might be necessary and describe how the tariff scheme works. Illustrate your answer with graphs.* (3 points) * Studenti del corso di ECONOMIA DEI SERVIZI E DELLE RETI non rispondono alla domanda. 4 3) Consider the metering…