TABLE 10- 2 Your food- services company has been named as the sole provider of meals at a small university.The cost and demand schedules are: $$\begin{array} { | c | c | c | c | c | }
\hline \text { Sold per Day } & \begin{array} { c }
\text { Price per } \
\text { Meal }
\end{array} & \begin{array} { c }
\text { Total } \
\text { Fixed Cost }
\end{array} & \begin{array} { c }
\text { Total } \
\text { Variable Cost }
\end{array} & \begin{array} { c }
\text { Total } \
\text { Revenue }
\end{array} \
\hline 0 & \$ 3.50 & \$ 150 & \$ 0 & \$ 0 \
\hline 100 & \$ 3.25 & \$ 150 & \$ 300 & \$ 325 \
\hline 200 & \$ 3.00 & \$ 150 & \$ 500 & \$ 600 \
\hline 300 & \$ 275 & \$ 150 & \$ 650 & \$ 825 \
\hline 400 & \$ 250 & \$ 150 & \$ 750 & \$ 1000 \
\hline 500 & \$ 225 & \$ 150 & \$ 830 & \$ 1125 \
\hline 600 & \$ 200 & \$ 150 & \$ 905 & \$ 1200 \
\hline 700 & \$ 1.75 & \$ 150 & \$ 995 & \$ 1225 \
\hline
\end{array}$$
-Suppose the technology of an industry is such that the typical firm's minimum efficient scale is 8000 units per month at an average long- run cost of $5 per unit.If the total quantity demanded at a price of $5 per unit is 8500 units per month,the likely result would be

Question

TABLE 10- 2 Your food- services company has been named as the sole provider of meals at a small university.The cost and demand schedules are: $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Sold per Day } & \begin{array} { c } 
\text { Price per } \
\text { Meal }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Fixed Cost }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Variable Cost }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Revenue }
\end{array} \
\hline 0 & \$ 3.50 & \$ 150 & \$ 0 & \$ 0 \
\hline 100 & \$ 3.25 & \$ 150 & \$ 300 & \$ 325 \
\hline 200 & \$ 3.00 & \$ 150 & \$ 500 & \$ 600 \
\hline 300 & \$ 275 & \$ 150 & \$ 650 & \$ 825 \
\hline 400 & \$ 250 & \$ 150 & \$ 750 & \$ 1000 \
\hline 500 & \$ 225 & \$ 150 & \$ 830 & \$ 1125 \
\hline 600 & \$ 200 & \$ 150 & \$ 905 & \$ 1200 \
\hline 700 & \$ 1.75 & \$ 150 & \$ 995 & \$ 1225 \
\hline
\end{array}$$
-Suppose the technology of an industry is such that the typical firm's minimum efficient scale is 8000 units per month at an average long- run cost of $5 per unit.If the total quantity demanded at a price of $5 per unit is 8500 units per month,the likely result would be

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can produce the entire market demand at a lower cost than two or more firms. In this case, the minimum efficient scale is 8000 units per month, and the total quantity demanded at a price of $5 per unit is 8500 units per month. This means that a single firm could produce the entire market demand at a lower cost than two or more firms, so a natural monopoly is likely to result.

TABLE 10- 2 Your Food- Services Company Has Been Named