Ecopower produces power in New York City according to a costfunction 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 regulatoryagency 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 PSCshould set?
(c) What is the change in consumer surplus and producer surpluswhen Ecopower is regulated?
