Given the demand function Price, Social welfare, marginal opportunity cost.
A business faces equal time periods of peak and off-peak demand for its service as given by the following:
P1 = 25 - .02Q1
P2 = 15 - .01Q2
The business faces marginal operation prices of $1.00 per unit. The business also faces a ability constraint like it must incur a $2.50 per-unit cost to expand capacity.
Between your answers to parts b and c, which prices/capacity are best applied from a social welfare perspective? Why?