Essay
The market demand for the output of a public utility is: QD = 250 - 2P
The firm's long-run average cost and long-run marginal cost functions are:
LAC = 50 - 0.125Q and LMC = 35 - 0.10Q
What price and quantity combination would result if the firm was not regulated?
Assume that the regulator set the price and quantity to . What will the profit of the regulator be?
What price and quantity should the regulator set to have the socially optimal result?
Correct Answer:
Verified
Correct Answer:
Verified
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