Given the following information:

A profit-maximizing monopoly initially has a straight-line market demand curve.No buyer is willing to pay more $60 per unit for the product.The monopoly has

bowl-shaped cost curves, and the lowest possible average cost for the monopoly is $20 per unit.

The monopoly charges one price to all buyers because the monopoly has no information on individual buyers.In the initial situation the monopoly charges a price of $40 per unit.

The government is considering imposing a policy of price floor with government purchase for this product.Specifically, the price floor for market sales and purchases would be $45 per unit.The price that the government would pay for any purchases that it makes would be $20 per unit. - called PRICE SUPPORT

If the government buys any units, it destroys these units.

Statement to evaluate:If the government adopts this policy, the monopoly will decrease the quantity it produces. - F it would actually increase because they would produce more to sell at the higher price, However, they would end up selling fewer units because of the increased price?

• Please indicate if this is True, False or Uncertain and explain why

[In your answer, you must draw a graph and base your explanation on your graph.]