Springfield Utility District (SUD) is a local electrical utility company and a natural monopoly. The marginal cost (MC), average cost (AC), demand (D) and marginal revenue (MR) curves for the company are shown below.
Part 1: Use the double drop line tool to illustrate where on the demand curve SUD will produce and the price it will charge if it is unregulated. Label this point as the unregulated equilibrium.
Part 2: Use an area tool to show the consumer surplus in this case and label it as unregulated CS.
Part 3: Use the double drop line tool to illustrate where SUD will produce if it is regulated so as to just break even. Label this point as the regulated equilibrium (Pr & Qr).
Part 4: Use an area tool to show the additional consumer surplus that would occur if SUD were regulated and label it as such.
CoordinatES: (0.00, 20.00) — Demand — Marg Revenue— Marginal Cost— Average Cast— Unregulated Eq— Regulated Eq— Unregulated CS— Additional CS— Unselected ‘Snapping a 1n 2:: an 40 an an m an an 100Quantity Clear All [3] [a
