Use the following to answer questions: Figure: Monopoly 8
-(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:
A) 9 units of output.
B) 10 units of output.
C) 14 units of output.
D) 17.5 units of output.

Question

Use the following to answer questions: Figure: Monopoly 8 
-(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:
A) 9 units of output. 
B) 10 units of output. 
C) 14 units of output. 
D) 17.5 units of output.

Quizplus · Accepted Answer

If the government set price equal to average cost, the natural monopolist would produce at the point where marginal cost equals average cost. In this figure, that occurs at an output of 9 units.

Use the Following to Answer Questions: Figure: Monopoly 8