The following are the demand and total cost schedules for Company Town Water, a local monopoly:  How much output will Company Town Water produce and what price will it charge? Will it earn a profit? How much? (First compute the firms MR and MC schedules)

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Q: 100 60 20 MR MC-ATC Demand

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A:

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A: C = 6400 + 100Q P = 500 - 4Q

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A:

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Q: What are the arguments for and against such a monopoly? Illustrate your answer with a diagram.

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