GOVERNMENT INTERVENTION IN MONOPLY MARKET 1. Maria's Monopoly is currently operating at a loss. a. Draw a correctly labeled graph and show each of the following: e The profit-maximizing quantity, labeled as Qm * The profit-maximizing price, labeled as Pm e The average total cost curve, labeled as ATC e The allocatively efficient quantity, labeled as Qa b. The government decides to grant Maria's Monopoly a lump-sum subsidy so that the firm will now earn zero economic profit. o Completely shade the area of the subsidy on your graph o Will Maria's profit maximizing quantity increase, decrease, or remain the same? Explain. c. Suppose instead that the government provides Maria with a per-unit subsidy so that her monopoly earns zero economic profit. e Will the profit-maximizing quantity increase, decrease, or remain the same? Explain. e Will the price paid by consumers increase, decrease, or remain the same? d. In this market, will the lump-sum or the per-unit subsidy lead to an increase in the total consumer surplus, or is the change indeterminate? Explain