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(9 marks) Suppose Super CC is the only natural gas producer in the economy. Currently, Super CC pays a xed license fee of $1 million
(9 marks) Suppose Super CC is the only natural gas producer in the economy. Currently, Super CC pays a xed license fee of $1 million to the government for providing natural gas services and its selling price is higher than its average cost of production. a. Draw a well-labelled diagram to Show the prot maximizing output, price and prot of Super CC. (5 marks) b. As the government runs a huge budget decit, the government proposes to raise the license fee to $2 million. Explain how the rise in the license fee affects the output level and prot of Super CC. (4 marks)
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