Figure 15-1: Cost curves for a water utility

c
q
AC
MC
Figure 15-2a: Welfare-increasing
monopoly
P
Q
q
m
MR
MC
p
c
p
m
D
1
D
2
CS
2
CS
1
0
Figure 15-2b: Welfare-decreasing
monopoly
p
m
p
c
0
q
m
D
1
D
2
MC
Q
P
CS
2
MR
CS
1
Figure 15-3: Optimal price regulation
24
18
16
10
D
I
MR
MC
Market demand
H
G
F
C
E
B
A
0
5 6 8 12 24
Q, Units per day
p
,

$

p
e
r

u
n
i
t
Regulated demand
MR
1
e
m
e
o
Image by MIT OpenCourseWare.
Figure 15-3: Optimal price regulation
24
18
16
10
D
I
MR
MC
Market demand
H
G
F
C
E
B
A
0
5 6 8 12 24
Q, Units per day
p
,

$

p
e
r

u
n
i
t
Regulated demand
MR
1
e
m
e
o
Image by MIT OpenCourseWare.
MIT OpenCourseWare
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14.01SC Principles of Microeconomics
Fall 2011
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