Energy

Question 1

National security dimension

Answer 1

National security is a public good. The market would generally result in an excessive dependence on imports. The long run domestic supply curve of oil reflects increasing availability of domestic oil at higher prives

Question 2

Average cost pricing

Answer 2

Entails averaging high cost sources w lower cost sources. The resulting rate will be lower than the true mc of power and thus is inefficient

Question 3

Peak load pricing

Answer 3

Pricing structure where consumers using peers during peak periods are charged higher rates during the peak periods