Monopolies can sometimes find themselves in difficult financial situations that lead to losses. Suppose Mr. Burns Power Company has a monopoly for providing electricity in Springfield. His costs of upkeep are so high that he is persistently losing money. Show this outcome in a completely labeled graph. Clearly identify all parts of your graph including the best price and output for the firm as well as the losses.
Now, answer the following:
What happens to the market when Mr. Burns raises the price he charges?
Will this stop his losses? Why or why not?