Energy Markets 4

How does an increase in WACC influence the EMV?

• Depends on the party (government or company)

• It will always increase EMV

• It will always decrease EMV

• It does not influence EMV at all

What is not a method for transforming resources to reserves?

• Rising prices of the resource

• New extraction technologies

• Discovery of new resources

• Decreasing cost of extraction

How do companies act in Cournot competition?

• They maximise profits over prices they take from their competition

• They maximise profits over quantity given the expected costs of their competitors

• They maximise profits over prices given the expected costs of their competitors

• They maximise the social benefit forming a cartel with their competitors

Compared to a monopoly, the perfect market does not offer:

• Lower prices

• Higher quantity

• Higher consumer surplus

• Higher producer surplus

How are quantities and prices in a duopoly compared to the monopoly (M) and perfect market (PM)?

• Prices: Lower than M, higher than PM

  Quantities: Lower than M, higher than PM

• Prices: Lower than M, higher than PM

  Quantities: Higher than M, lower than PM

• Prices: Higher than M, higher than PM

  Quantities: Lower than M, lower than PM

• Prices: Lower than M, lower than PM

  Quantities: Higher than M, higher than PM

Where do market prices usually lie compared to SRMC and LRMC?

• In between them

• Higher than LRMC and SRMC

• Higher than LRMC

• Lower than SRMC

What does usually happen to SRMC and LRMC in the case of a field dropping out?

• Both of them increase

• One of them increases

• Both of them decrease

• One of them decreases

What is not part of a boom & bust cycle?

• Some producers facing losses

• All producers making profit

• Entry of new participant & exit of old ones

• Prices decreasing below the SRMC

What is not a base assumption of perfect markets?

• Many buyers and sellers

• Suppliers are price-takers

• Market power of participants

• Homogeneous goods

Which key characteristic makes energy markets relatively complicated?

• Oligopol structure

• Inelastic demand meets inelastic supply

• Volatility of prices

• Cost structure with high fixed costs