The following graph depicts the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for a firm operating as a natural monopoly. Costs and Revenues (dollars) 80 70 60 30 20 10 0 Market for a Natural Monopoly MC Quantity ATC D MR 10 20 30 40 50 60 70 80 90 100 0 Instructions: Enter your answers as a whole number. a. If the firm is operating as a natural monopoly, what is the profit-maximizing level of output and price charged to consumers? $ and units will be sold b. At what price would the firm earn a normal profit? $ c. Suppose the government regulated the monopoly such that it were required to charge the perfectly competitive price. What is the regulated price? $

The following graph depicts the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for a firm operating as a natural monopoly. Costs and Revenues (dollars) 80 70 60 30 20 10 0 Market for a Natural Monopoly MC Quantity ATC D MR 10 20 30 40 50 60 70 80 90 100 0 Instructions: Enter your answers as a whole number. a. If the firm is operating as a natural monopoly, what is the profit-maximizing level of output and price charged to consumers? $ and units will be sold b. At what price would the firm earn a normal profit? $ c. Suppose the government regulated the monopoly such that it were required to charge the perfectly competitive price. What is the regulated price? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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