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The Public Service Company of the Southwest is regulated by an elected state utility commission. The firm has total assets of $500,000. The demand function
The Public Service Company of the Southwest is regulated by an elected state utility commission. The firm has total assets of $500,000. The demand function for its services has been estimated as P = $250 $0.159 The firm faces the following total cost function: TC = $25,000 + $10Q In an unregulated environment, the firm would charge and produce C] units. The total profit at this price-output level is , which means the firm earns a :l percent rate of return on its asset base. The firm has proposed charging a price of $100 for each unit of output. If this price is charged, the total profit will be , which means the firm earns a C] percent rate of return on its asset base
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