a. Draw a graph for a monopoly, labeling all curves. Label the monopolists profit-maximizing quantity and price
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a. Draw a graph for a monopoly, labeling all curves. Label the monopolist’s profit-maximizing quantity and price Q1 and P1. (Hint: Draw the graph fairly big so that you can answer part b more easily).
- Now the government regulates the monopoly by putting a price ceiling on the good. Choose a level for the price ceiling (call it P2) and on your graph show what quantity the monopolist will produce (label it Q2). What will happen in the market?
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