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Suppose a Neu is the only gas supplier in town

Economics

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Suppose a Neu is the only gas supplier in town. She is facing a market demand for gas of Q = 2,000 - 0.2P. She has a cost function of C = 5,000,000 + 100Q. a. b. Find the profit-maximizing output level, price level and the profit of Neu. Show these results in a well-labelled diagram. (12 marks) In order to achieve an efficient output level, a legislator suggests a price control on Neu. Explain the price the government should set in achieving so. Explain the disadvantage of doing so. (5 marks) Instead of a price control, another legislator suggests charging a lump-sum tax on Neu. Explain why this does not improve the efficiency of Neu.