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A6 A profit-maximising monopoly has cost function c(y) = F + y, where F = 10, 000, 000 (in pounds), and it faces an inverse market demand curve of the form p(y) = 12000 - 2y. If it charges the same unit price on all units, what quantity does it sell and at what unit price? The government wants to set a price ceiling so that the unit price does not exceed marginal cost and offers the monopoly a subsidy, up to a maximum of $500, 000, to cover any losses. Is the firm still able to operate under such regulations? Explain your