Answer to Question #70342 in Economics of Enterprise for Coral

Question

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 - $0:15Q
The firm faces the following total cost function:
TC = $25,000 + $10Q
(The total cost function does not include the firm’s cost of capital)
a. In an unregulated environment, what price would this firm charge, what output would be
produced, what would total profits be, and what rate of return would the firm earn on its asset
base?