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A new law was enacted that prohibits the monopoly from charging different prices in separated markets. With this new single-price law the monopoly is restricted
A new law was enacted that prohibits the monopoly from charging different prices in separated markets. With this new single-price law the monopoly is restricted to set only one single price no matter how many separated markets in which it monopolies. The board of directors of the monopoly has two options: either combine two markets into one market by summing up two demand functions or give up one of the two markets. Imagine that you were the chief economist working for the monopoly. How would you advise the monopoly's directors to set a price for maximizing profit? Be specific about your recommended price for the directors under the new law. Evaluate whether all consumers will get better off after the singe-price regulation is enforced
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