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Suppose a monopolistic utility firm faces a market demand featured by Q = 100 – P....

Suppose a monopolistic utility firm faces a market demand featured by Q = 100 – P. It has a total cost function: TC = 2000 + 10Q. (You must show all steps of calculation. Without showing your work, you get zero mark for even correct answers.) If there is no regulation, what output level and price would be chosen by the firm? Calculate the level of output Q*, price P*, and the deadweight loss (DWL). If two-part pricing is used to achieve efficiency while avoiding subsidization, what would be the total access fee to charge all consumers and what would be the price per unit? Is the change from profit maximizing pricing (in part 1) to two-part pricing (in part 2) a Pareto improvement? How do you know?

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