Moving Water Around The San Diablo dam has electricity generating ...

[lilldybug07]

Moving Water Around The San Diablo dam has electricity generating turbines on a chute that connects lower and upper reservoirs. During the day, water is drained from the upper reservoir to the lower to produce electricity. But at night, electricity is used to pump the water back up to the upper reservoir. Since the water is just going back and forth, how can wealth be generated?

Question 2

Baseball Cards Your favorite uncle left you his baseball card collection in his will. Since you are not a fan, you auction them off on an Internet website. Since nothing was created, how could this decision have created wealth?

[mathjasmine]

Answer to Question 1

Peak demand for electricity is during the day when but the system has excess capacity at night. This makes electricity expensive to produce during peak times during the day but cheap to produce at night. The system uses the excess capacity to move the water uphill at night, so that it can meet peak demand during the day. In the morning, the water has a higher value at the top than at the bottom.

Answer to Question 2

The transaction moved the baseball card collection from a low valued use in your possession to a higher valued use in the possession of a true fan.

[lilldybug07]

Thank you

[mathjasmine]

Happy to help you