The City of Gatineau plans to give an exclusive contract to a cable distribution in its territory. A consulting economist firm mandated by the municipality estimates that demand and costs totals are expressed respectively by the following functions: P=28 - 0.0008Q (demand) CT = 120,000 0.0006 Q2 where Q is the number of cable subscribers; P= the monthly subscription rate; CT = total costs. Before awarding the contract, the municipality still asks itself a few questions:

1) If we allow the cable company to do what it wants, what price will it charge? How many subscribers would there be then?

2) the municipality decides to regulate the price charged by the cable company so that it corresponds to a competitive price, what will this price be? Under these conditions, how many will there be subscribers?

3) Represent unregulated and regulated solutions on the same graph. Comment on the two situations in terms of collective well-being (total surplus).