Please help solve part g and h only. thank you The government knows that as a monopolist Spectral is earning supernormal profits. Aregulator is considering a lower price. Assume that the regulator sets a price of $20 andthat Spectral can choose to supply as many households at this price as it would like.g) At the regulated price of $20, what would be the demand for internet services?h) At the price of $20 would Spectral be willing to supply all of the units thatconsumers wish to buy? Briefly explain. 2. Spectral provides internet services in Winnebago. The production function for Spectralis given by the following: Q=f(L,K) = L0.6K0.4 where L represents man-hours, Krepresents machine hours and output Q is measured in households served. The price of anhour of labor is $6 and the price of an hour of machine time is $4.a) Given the input prices and the production function set up the cost minimizationproblem. Solve the cost minimization problem to determine the (compensated)factor demands for labor and machines. Find the variable cost function.Assume for the remainder of the question that the fixed costs of Spectral are $250.b) Given the fixed costs what are the average costs of Spectral? What is the marginalcost curve of Spectral. Illustrate the two cost curves in the diagram.c) For what values of Q do Spectral's cost curves exhibit "scale" economies?Because of Spectral's cost structure it is a monopolist in Winnebago. Inverse demand forinternet services in Winnebago is given by P = 110 -0.1Q where Q is again measured inhouseholds and P is the price of serving a household.d) Given its cost structure and the market demand, how many households willSpectral choose to serve? What price will it charge?e) In your cost diagram for part (b) illustrate the demand curve and marginal revenuecurve for this market. Indicate the profit maximizing price and quantity that youfound in part (d).f) In your diagram for part (b) illustrate the profits of Spectral at the profitmaximizing price and quantity.

Given: Production function: Q=L0.6K0.4 Price of labor or wage rate (w) = $6 Price of Machine (r) =…

The government knows that as a monopolist Spectral is earning supernormal profits. A regulator is considering a lower price. Assume that the regulator sets a price of $20 and that Spectral can choose to supply as many households at this price as it would like. g) At the regulated price of $20, what would be the demand for internet services? h) At the price of $20 would Spectral be willing to supply all of the units that consumers wish to buy? Briefly explain.

The government knows that as a monopolist Spectral is earning supernormal profits. A regulator is considering a lower price. Assume that the regulator sets a price of $20 and that Spectral can choose to supply as many households at this price as it would like. g) At the regulated price of $20, what would be the demand for internet services? h) At the price of $20 would Spectral be willing to supply all of the units that consumers wish to buy? Briefly explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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