Chapter6: Exponential And Logarithmic Functions
Section6.1: Exponential Functions
Problem 3SE: The Oxford Dictionary defines the word nominal asa value that is “stated or expressed but...
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Transcribed Image Text:There are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of
Q= 60 -P.
Lake Wobegon Electric's (LWE) cost of producing electricity is
TC 575+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 $ 2, and the firm would produce 580 units of electricity
Total consumer surplus would be $ 16820 , and the firm would earn a $ - 575 profit.
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 $
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