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The government is aware that as a monopolist Warner is earning supernormal profits. A regulator is would like to set the price so that Warner
The government is aware that as a monopolist Warner is earning supernormal profits. A regulator is would like to set the price so that Warner earns normal profits. The regulator sets the price at $70. h) What quantity would be traded at P = $70 (assuming that consumers can buy as many units at this price as they would desire)? i) Would Warner be willing to supply all of the units that consumers wish to buy at P = $70? Briefly explain. j) Show that at P = $70, Warner's is earning 0 profits. Illustrate
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