Ecopower produces power in New York City according to a cost function of C(Q) = Q^2....

Ecopower produces power in New York City according to a cost function of C(Q) = Q^2. The the demand for power in Oklahoma is p = 24−Q where p is the price per mega watt hour (MWh).
The Oklahoma Public Service Commission (PSC) is the regulatory agency for many essential services – electric, telephone, water, etc.

(a) If Ecopower were able to act as though it weren’t regulated, what would the deadweight loss be?
(b) What is the optimal monopoly regulated price that the PSC should set?
(c) What is the change in consumer surplus and producer surplus when Ecopower is regulated?

Expert Solution

Rahul Sunny answered 7 months ago

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