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Aqua Pure has a natural monopoly on providing water to households in a local apartment complex....

Aqua Pure has a natural monopoly on providing water to households in a local apartment complex. They can provide water at an average cost of ATC = 240/Q + 6, and a constant marginal cost of MC = $6. Demand for water in the apartment complex is given by P = 40 – 0.5Q. What is Aqua Pure’s unregulated monopoly price, the socially optimal price, and the fair-return price?

Monopoly Price: $

Socially Optimal Price: $

Fair-Return Price: $

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