Problem
Red River Valley Electric Power has a monopoly in the supply of electric power in its region. Draw a diagram with a downward sloping demand curve and the corresponding marginal revenue curve. Add a constant average cost curve and identify the quantity produced and price charged when Red River exercises its monopoly power. However, the industry is soon to be opened to competition. Identify the price and quantity that would be expected in a competitive market for electric power. Shade in the area that represents the deadweight loss eliminated when the market is opened to competition.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.