Suppose that the demand for electricity by residential consumers is the same for all consumers and is given by P = 1 - Q/100 where P is the price per kw-hour in $ and Q is the kw-hours per week.

Suppose that the marginal cost of supplying electricity is $0.20 per kw-hour.

1. If the electricity company can charge a fixed fee as well as a price per unit, calculate the profit maximizing fee per week, the quantity of kw-hours sold, and the price charged. (Remember the consumer will participate if his consumer surplus is at least zero).
2. What is the consumer surplus under the profit maximizing pricing scheme?
3. Does this profit maximizing pricing scheme cause any deadweight loss? Explain.