Calculate the economic profit in both scenarios

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Reference no: EM131402148 , Length: 1

Suppose that the government is the only provider of water.

The market demand function reads D: Q(P) = 50 - 2P.

The government's total cost for producing water are described as follows:

TC(Q) = 100 + 10Q.

a) What price will the government charge if it wants to ensure an efficient allocation of water?

b) What price will the government charge if it wants to maximize profits?

c) Calculate the economic profit in both scenarios.

Reference no: EM131402148

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