MC for the firm of selling water( 2.ATC for the firm of selling water B. the price of nater, 4 the MartialBatting for the nonthe water $8/cu,ft SO/CUL.. S $1/cu.n. ATO of selling water $2 /cunt. 60 million cu f /day 100 million cu friday15. If the government is concerned about the "DEAD WEIGHT LOSS" by the firm at equilibrium, the government could regulate the price by allowing the firm to charge a price that is equal to MARGINAL COST(called MARGINAL COST pricing) n. Determine what that price would by b. Determine the quantity of water the firm will sell at this price 16. It is often alleged that firms will simply increase the price they charge their customers in the event of an increase in in their units cost but without proof. Let's test that idea. Suppose the firm's marginal cost increases by $2/cu.ft.(I've drawn a new marginal cost curve to reflect that increase). (note the dashed marginal cost curve is $2/cu.ft. higher than the original marginal cost curve) Determine. a. the new equilibrium quantity the firm will sell b. the new equilibrium price the firm will charge If you did this correctly the firm is going to raise the price by $1/cu. ft. although its Marginal Cost increased by $2/cu.ft. Explain why the price cannot increase by an amount equal to the rise in Marginal cost 17. Draw on the diagram, an Average Total Cost curve so that the monopolist would always incur economic losses or state what that curve would look like