Demand is A and average cost is B.

A = 3,000 - 3Q

B = 1 500 = constant

A stands for price per unit and Q is the number of units measured in 1,000.

There are no substitutes or competitors this units. The maximum price is 2,000 per unit.

a)How does the producer's profit and market power change as a result of price regulation?

b)Assume they want the maximum production volume from a) and are considering to adjust the maximum price accordingly.

Which maximum price gives the highest production, and how much will they produce?