There are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of Lake Wobegon Electric's (LWE) cost of producing electricity is Q-50-P. TC=575+Q. 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.
There are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of Lake Wobegon Electric's (LWE) cost of producing electricity is Q-50-P. TC=575+Q. 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:There are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of
Lake Wobegon Electric's (LWE) cost of producing electricity is
Q=50-P.
TC=575+Q.
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.
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