From Private to Public Water Supply. Consider the British experience with water provision. Suppose that an unregulated private monopoly has a price of $3 per unit, a quantity of 10 million units, an...

From Private to Public Water Supply. Consider the British experience with water provision. Suppose that an unregulated private monopoly has a price of $3 per unit, a quantity of 10 million units, an average cost of $2 per unit, and a constant marginal cost of $1. (Related to Application 1 on page 630.)

a. Use a graph to show the price, quantity, and average cost as an outcome of profit maximization.

b. Use your graph to show the effects of average-cost regulation on the price, the average cost, and the quantity of output