Q5. The graph below represents a monopoly firm. Answer the questions below. ( a. Briefly explain three ways in which pricing can be set with a regulated monopoly and the intended objective of each pricing method. b. Based on the diagram, if this monopoly firm is unregulated, what will be its profit? Show your calculations. c. Based on the diagram, if this firm is regulated based on social interest theory, what will be its profit? Show and explain your calculations. d. Based on the diagram, if this monopoly is subject to rate of return regulation, what will be the new price, output and profit of the firm? Show your calculations with explanations. e. Based on the diagram, if this is a natural monopoly that is allowed to set its price, what will be the minimum it should set in order to make a profit or break even? Explain your answer.
Q5.
The graph below represents a
a. Briefly explain three ways in which pricing can be set with a regulated monopoly and the intended objective of each pricing method.
b. Based on the diagram, if this monopoly firm is unregulated, what will be its profit? Show your calculations.
c. Based on the diagram, if this firm is regulated based on social interest theory, what will be its profit? Show and explain your calculations.
d. Based on the diagram, if this monopoly is subject to
e. Based on the diagram, if this is a natural monopoly that is allowed to set its price, what will be the minimum it should set in order to make a profit or break even? Explain your answer.
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