Assignment Help-Economics
Southern California Edison (SCE) is the only provider of electricity in Orange County. The rates SCE is allowed to charge are actually set by a branch of state government, the Public Utility Commission (PUC), but assume for purposes of this question that the PUC allows SCE to charge whatever it wishes. Assume further that SCE acts as a profit-maximizing entity. SCE currently charges lower rates for farmers who use electricity to run their irrigation pumps than for commercial enterprises that use electricity to run their air conditioners. The International Brotherhood of Electrical Workers (IBEW) is a union that seeks to represent the information technology workers at SCE. Assume the IBEW has just won a union representation election, and has become the sole bargainer with SCE for the wages to be paid IT workers at SCE.
a) What is likely to happen to the electrical rates charged farmers and commercial enterprises?
b) Will one change more than the other?
Illustrate your answers with appropriate diagrams.
