11) Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 60 – 2Q and the total cost function has been estimated to be TC(Q) = 240 + 0.5Q² where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service. a. What would be the allocatively efficient price and quantity? b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus? c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree price discrimination? What is the firm’'s profit? What is the consumer surplus?

11) Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 60 – 2Q and the total cost function has been estimated to be TC(Q) = 240 + 0.5Q² where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service. a. What would be the allocatively efficient price and quantity? b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus? c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree price discrimination? What is the firm’'s profit? What is the consumer surplus?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.3P

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