(b) Suppose you manage a rural electric (utility) firm in Georgia, USA, and thefirm is the only supplier of

electricity in the county. Assume that the market demand function for electricity in thecounty is

Q = 675 - 500P and the costs of electricity produced by theelectric firm is C(Q) = 120 + 0.13Q, where Q is quantity demanded or produced (output) and P is unit price. What is the condition for short-run profit maximization by a monopolist and, with theprofit maximization condition, what are thesteps and what are the short-run profit maximizing output and price of electricity by theelectric firm?

(c)What are the steps and determine what the own-price elasticity of demand at the short-run profit maximizing levels of output and price in (b) above.

(d)Carefully explain why the estimated price elasticity of demand in (c) above is reasonable or not.

(e)Suppose the firm is regulated to perform as a perfectly competitive firm, graphically illustrate and explain how such a regulation would impact the profit maximizing output and price levels in (b).