Water bottles are the best-selling item in airport stores. In many airports, the price charged is whatever the market will bear. However, some airports limit the price. San Francisco International and Dallas-Fort Worth International set a cap at “street prices” plus 10% (Scott McCartney, “The Price You Pay for Water at the Airport,” Wall Street Journal, April 22, 2015.)
Assume that one firm runs all the stores in the airport and that a competitive market determines the street price of water bottles outside of the airport. Use a figure to show how the regulated price differs from the unregulated price.