Figure 10.1
The revenue and cost curves in the diagram above are those of a natural monopoly.
-Refer to Figure 10.1. If the monopolist is not regulated, the price will be set at ________.

Question

Quizplus · Accepted Answer

If the monopolist is not regulated, they will choose the price at which marginal revenue equals marginal cost, which is at point P2. At this price, the monopolist will produce output level Q2 and earn economic profits.

Figure 10.1 The Revenue and Cost Curves in the Diagram Above Are