Order the answer to: The accompanying diagram illustrates your local electricity company’s natural monopoly.

Custom Essays business economics Order the answer to: The accompanying diagram illustrates your local electricity company’s natural monopoly.

business economics

Order the answer to: The accompanying diagram illustrates your local electricity company’s natural monopoly.

Question a. If the government does not regulate this monopolist, which price will it charge? Illustrate the inefficiency this creates by shading the deadweight loss from monopoly.
b. If the government imposes a price ceiling equal to the marginal cost, $0.30, will the monopolist make profits or lose money? Shade the area of profit (or loss) for the monopolist. If the government does impose this price ceiling, do you think the firm will continue to produce in the long run?
c. If the government imposes a price ceiling of $0.50, will the monopolist make a profit, lose money, or break even?
Subject business economics
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