Figure 15-1: Cost curves for a water utility
c
AC
MC
q
Figure 15-2a: Welfare-increasing
monopoly
P
CS2
pm
CS1
pc
D2
D1
MR
0
qm
MC
Q
Figure 15-2b: Welfare-decreasing
monopoly
P
CS2
pm
CS1
D1
pc
D2
MC
MR
0
qm
Q
Figure 15-3: Optimal price regulation
MC
24
Market demand
A
p, $ per unit
18
16
F
B
em
G
C
E
H
D
eo
Regulated demand
MR1
10
MR
I
0
5
6
8
12
24
Q, Units per day
Image by MIT OpenCourseWare.
Figure 15-3: Optimal price regulation
MC
24
Market demand
A
p, $ per unit
18
16
F
B
em
G
C
E
H
D
eo
Regulated demand
MR1
10
MR
I
0
5
6
8
12
24
Q, Units per day
Image by MIT OpenCourseWare.
MIT OpenCourseWare
http://ocw.mit.edu
14.01SC Principles of Microeconomics
Fall 2011
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