Exhibit 15-4

-The firm in Exhibit 15-4 is a natural monopoly.If a government regulator forces the monopoly to set price equal to marginal cost,the quantity produced is:

Question

Exhibit 15-4
 
-The firm in Exhibit 15-4 is a natural monopoly.If a government regulator forces the monopoly to set price equal to marginal cost,the quantity produced is:

Quizplus · Accepted Answer

Since the firm is a natural monopoly, its marginal cost curve is also the same as its average cost curve. At the point where MC = AC, the quantity produced is 210 units. Therefore, if the regulator forces the monopoly to set the price equal to marginal cost, the firm will produce and sell 210 units.

Exhibit 15-4 -The Firm in Exhibit 15-4 Is a Natural Monopoly.If a a Natural