Graph the effect of price regulation where P is set above MC.
a. Indicate the competitive equilibrium price, P*, quantity, Q*, and efficient scale q.
c. Assume that there are already 10 firms in the market. If this market is only partially regulated, what is likely to happen?
i. What happens if the price regulation is not coupled with entry/exit regulation?
ii. What happens to welfare and firm costs if more firms enter the market?
$
/AC(Q)
D(P)
Q