P2 Economics8. Natural monopoly analysisThe following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR)curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas company, a natural monopolist.On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.PRICE (Dollars per hundred cubic fe01MR235678QUANTITY (Hundreds of cubic feet)TrueATCMCO False910DWhich of the following statements are true about this natural monopoly? Check all that apply.It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.In order for a monopoly to exist in this case, the government must have intervened and created it.The gas company must own scarce resource.The gas company is experiencing diseconomies of scale.Monopoly OutcomeTrue or False: Without government regulation, natural monopolies never earn zero profit in the long run.WHICH OF THE FOLLOWING STATEMENTS ISTRUE?

A monopolist (whether natural or non natural) would choose the profit maximizing level of quantity…

Answered: True or False: Without government…

Business

Economics

True or False: Without government regulation, natural monopolies never earn zero profit in the long run. True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Economics
8. Natural monopoly analysis
The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR)
curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas company, a natural monopolist.
On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.
PRICE (Dollars per hundred cubic fe
0
1
MR
2
3
5
6
7
8
QUANTITY (Hundreds of cubic feet)
True
ATC
MC
O False
9
10
D
Which of the following statements are true about this natural monopoly? Check all that apply.
It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.
In order for a monopoly to exist in this case, the government must have intervened and created it.
The gas company must own scarce resource.
The gas company is experiencing diseconomies of scale.
Monopoly Outcome
True or False: Without government regulation, natural monopolies never earn zero profit in the long run.
WHICH OF THE FOLLOWING STATEMENTS IS
TRUE?

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