Figure 8.13 Short-Run Supply of Electricity in Texas

The short-run supply of electricity in Texas is the horizontal sum of the firms’ marginal cost curves in Figure 8.12. When the market price is at least $15 per MWh, Firm 2 supplies electricity on the market. At prices at or above $18 per MWh, Firms 1 and 2 both supply on the market. At a market price of $23 per MWh, Firm 3 generates electricity using natural gas, and all three firms are suppliers on the electricity market.