Find equilibrium price and output and economic profits

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Reference no: EM1375706

The widget industry in Anytown is a monopoly, controlled through Widget Corporation Its demand curve for the local market is given through
P = 800 - 20 W
Where W represents the number of widgets sold per period.
The total cost function (including opportunity or implicit costs) for Widget Corp. is
TC = 300 + 500 W + 10W^2

a. Suppose that the industry is unregulated, what are the equilibrium price and output and economic profits earned by Widget Corp.?
b. If the industry is regulated and the regulatory authority forces Widget Corp. to earn only a normal return on investment (which is included in its cost function), what is the resulting equilibrium price and quantity?
c. What happens to consumer surplus? What happens to the economic profits earned by Widget Corp.?

Reference no: EM1375706

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