Concept explainers
The cause of the natural
Answer to Problem 1CQQ
Option ‘d’ is correct.
Explanation of Solution
Option (d):
Natural monopoly exists due to higher cost of production, and an increase in the output will decrease the
Option (a):
Under Natural monopoly, firms can control either the
Option (b):
When the large firms maximize its output by increasing their quantity output, then the marginal cost decreases due to the benefits of economies of scale under monopoly. Thus, option ‘b’ is incorrect.
Option (c):
Under Natural monopoly, firms can control either the price or quantity which allows the firm to increase the average revenue by increasing the price. Thus, option ‘c’ is incorrect.
Concept introduction:
Monopoly: Monopoly is a market situation where a single firm exists with a large number of buyers without any available substitute.
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Chapter 14 Solutions
Essentials of Economics (MindTap Course List)
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- Ron's Hamburger Place is the only restaurant in town, a monopoly Price and cost (dollars per hamburger) 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0 Price: $ [Select] ATC: $ [Select] 10 Profit: $ [Select] dan da MR MC Alt Text: Ron's Hamburger Place What is the profit maximizing output, price, and economic profit of Ron's Hamburgers, monopoly? Quantity: [Select] hamburgers per hour ATC 20 30 40 50 Quantity (hamburgers per hour) per hamburgerarrow_forward3. The graph below shows a firm's demand, marginal revenue, and marginal cost curves. Find the profit-maximizing level of output and mark it q*. Find the price the firm should charge and mark it P*. P MC X D MR Quantity 4. The Whatsa Widget Company has a monopoly over the sale of widgets in a small midwestern town. The firm's demand, marginal revenue, marginal cost, and average cost curves are shown below. Find the firm's profit-maximizing level of output and the price the firm will charge. Is the firm earning a positive or a negative profit? Show the firm's profit (or loss) on the graph. P MC X MR D ATCarrow_forwardQuestion 1 Please review the graph below. Based on image, this is a a Price P₁ 1 P. monopolistic competitive firm; P2 b natural monopoly; P2 с monopolistic competitive firm; P1 A natural monopoly; P1 QM and will charge a price of MR Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. F E to maximize their profits. ATC MC Demand Qc Quantityarrow_forward
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