The widget Industry in Anytown is a monopoly, controlled by Widget Corp. Its demand curve for the local market is given by
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 + 10 W2
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?
What happens to consumer surplus? What happens t o the economic profits earned by Widget Corp.?