Suppose the economy has been experiencing zero inflation and five percent unemployment for several years. The government decides to lower the unemployment percentage by generating some inflation. You need to do the following:

Answer 1

I personally would do nothing.

Answer 2

Do total profits (A) decrease, (B) increase, or (C) stay the same when new technology reduces average
total costs (shifts ATC downward in Figure 26.2 ) in
(a) An unregulated natural monopoly?
(b) A price-regulated natural monopoly?
(c) A profit-regulated natural monopoly?