Question: There are 10 households in lake woebegone, each with a demand for electricity of Q=50-P. Lake woebegone Electric’s (LWE) cost producing electricity is TC= 500 +Q

a.) If the regulations of LWE want to make sure that there is no deadweight loss in this market, what price will they force LWE to charge? What twill the output is in that case? Calculate consumer surplus and LWE’s profit with that price.

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?

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