http-// 231 5573662184 8718elSBN 978 5% MI NDTAP Homework (Ch 15) Dur Today at 7
ID: 1114174 • Letter: H
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http-// 231 5573662184 8718elSBN 978 5% MI NDTAP Homework (Ch 15) Dur Today at 7 PMPST 8Nateral monopoly analysis The bleng graph show' d-demand CD) for gas services nth" magnary town of uelebrp The graph also shows the marpral revenu" CMR) arve, .marginal cost CMC) carve, and the average ut cost (ATC) rve for the kcal gas company, a natural maropolst. On che folowing graph, use the black point (plun symbo) to indicate the profe-maximining price and quaneny for this nanural monopolst Monopoly Outcome QUANTITY(Hundreds of ubic e areer for·manapely to ecat n this case, re govemmars must h.ve marvened and outed t,Explanation / Answer
Monopoly outcome is produced at the point MR = MC
Looking at the graph, this occurs at P = $12 and Q = 400
2. Correct option: (a)
Reason: In the case of a natural monopoly , market competition does not work well and so, rather than allowing an unregulated monopoly to raise price and reduce output, the government may wish to check price and/or output.
3. False (because of high cost constraints)
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