Impose a legal price ceiling on onus monopoly ferry operator

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Problem: Onus residents, in questions 2.a.-d. above, complain to their local politicians about the high prices. In an attempt to reduce the exorbitant price that the residents must pay for ferry service to and from the mainland, the local politicians convince the legislature to make a regulatory board which will impose a legal price ceiling on the Onus monopoly ferry operator.

In this scenario, the regulatory board imposed a price ceiling on the Onus monopoly ferry operator that was calculated to be below the ferry operator's lowest ATC, but well above its lowest AVC. in significant detail, what will be the short run and long run impacts of such a price ceiling on the Onus monopoly ferry operator's profits and continued ability to provide service to the inhabitants of the island of Onus.

Reference no: EM132421828

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