Question 3:

Please refer to your graph in Question 2. You have been asked to

analyze what will happen to the New England market for electricity if

the Winter 2022-23 (December 2022 through February 2023) results

in much colder temperatures than Winter 2021-22 (December 2021

through February 2022), causing all residential customers to

scramble for more electricity than they would typically need to heat

their homes.

• Using your graph from Question 2, analyze the impact of this

change in consumer desire for more electricity. Clearly show

any shifts in demand and/or supply curve(s) that came about

because of this exit. Label any shifted curves as D₂and/or S₂.

• Clearly show the new market equilibrium. Label the new

equilibrium price as P₂ and equilibrium quantity transacted

as Q₂.