Figure 15-16

Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Question

Figure 15-16
  
Figure 15-16 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 15-16.In the absence of any government regulation, the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Quizplus · Accepted Answer

The profit-maximizing output level is where marginal cost (MC) equals marginal revenue (MR), which occurs at Q2 in this graph. At this output level, the price charged is P2.

Figure 15-16 Figure 15-16 Shows the Market Demand and Cost Curves Facing