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Consider a regulated natural monopoly with an initial price (equal to average cost) of $3 per unit. Suppose the demand for the monopolist's product increases.

  1. Consider a regulated natural monopoly with an initial price (equal to average cost) of $3 per unit. Suppose the demand for the monopolist's product increases. What will happen to the price? How does this differ from the effects of an increase in demand for a product produced in a price taker market? (2 points)

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