Unformatted text preview: profit, and the deadweight loss if the firm is regulated with ATC pricing. d. What are the benefits of MC pricing over ATC pricing? e. Why does the government regulate the Natural Monopoly? Question 3: Suppose that there is a community that is thinking of building a public swimming pool (suppose they won’t keep anyone out and it won’t be crowded). There are 5 people in the community. They all value the pool differently. Their values for the pool are as follows: Ryan 100 Seth 200 Summer 300 Taylor 400 a. Suppose that the pool costs 950 to build. Is it efficient to build the pool? b. What if the pool costs 1050? c. Suppose that each was asked to voluntarily contribute to the pool, what problem are we likely to see? d. What is one way to fix this?...
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- Spring '08