Posted by Sally on .
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.
the price will increase