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3. Suppose the Clean Springs Water Company has a monopoly on bottled water sales. If the price of tap water increases, what is the change in Clean Water’s profit-maximizing levels of output, price, and profit? Explain in words and with a graph.

Take a shot. What do you think.

Hint: tap water is a substitute for bottled water. If the price of tap water goes up, what should happen to the demand for bottled water.

  • Economics -

    the price will increase

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