Suppose the city of LA is considering a proposal to award an exclusive contract to an electricity provider. The demand function has been estimated to be P = 50 - Q and the total cost function has been estimated to be TC(Q) = 300 + 0.5Q2 where Q is the number of internet contracts (in thousands) and P is the price of monthly internet service.

a. What would be the socially efficient price and quantity, i.e. the outcome in a competitive setting where P = MC?

b. What price and quantity would be expected if the firm can operate completely unregulated? What is the firm's profit? What is the consumer surplus?

c. What would be the minimum price charged to the marginal consumer if the firm can execute first degree price discrimination? What is the firm's profit? What is the consumer surplus?

d. Would it be feasible to regulate this firm with an allocatively efficient price cap? e. Calculate the deadweight loss in parts B and C. Identify the DWL on a graph.