Question

There are 10 households in Lake​ Wobegon, Minnesota, each with a demand for electricity of Q=50-PLake Wobegon​ Electric's (LWE) cost of producing electricity is TC=550+2. TC=550+2Q.

a. If the regulators of LWE want to make sure that there is no deadweight loss in this​ market, what price will they force LWE to​ charge? What will output be in that​ case? Calculate consumer surplus and​ LWE's profit with that price. ​(Round all responses to two decimal​ places.) The regulated price would be $____? ​And the firm would produce __ units of electricity. Total consumer surplus would be ​$ ___,and the firm would earn a $___ profit.

b.

b. If regulators want to ensure that LWE​ doesn't lose​ money, what is the lowest price they can​ impose? Calculate​ output, consumer​ surplus, and profit. Is there any deadweight​ loss? ​(Round all responses to two decimal​ places.)

The regulated price would be ​$_____​, and the firm would produce ____ units of electricity. Total consumer surplus would be ​$___ and the firm would earn a $___profit. Finally, there will be a deadweight loss of $___

Answer 1