Exhibit 26-4

-Refer to Exhibit 26-4.What is the total revenue of the profit-maximizing natural monopoly?

Question

Exhibit 26-4
 
-Refer to Exhibit 26-4.What is the total revenue of the profit-maximizing natural monopoly?

Quizplus · Accepted Answer

The profit-maximizing natural monopoly will produce at the output level where marginal cost equals marginal revenue. This is at point Q1 on the graph, where the marginal cost curve intersects the marginal revenue curve. The total revenue of the profit-maximizing natural monopoly is equal to the price charged at that output level multiplied by the quantity sold. This is equal to P1 x Q1.

Exhibit 26-4 -Refer to Exhibit 26-4.What Is the Total Revenue of the Total