Use the figure below to answer the following question.

Figure 13.1.1
-Refer to Figure 13.1.1. The quantity demanded by the market is 8 million cubic metres a month. This market is
A)a legal monopoly.
B)served by a perfect price discriminating monopoly.
C)served by many firms each making an economic profit.
D)served by many firms each incurring an economic loss.
E)a natural monopoly.

Question

Use the figure below to answer the following question.
  
Figure 13.1.1
-Refer to Figure 13.1.1. The quantity demanded by the market is 8 million cubic metres a month. This market is
A)a legal monopoly. 
B)served by a perfect price discriminating monopoly. 
C)served by many firms each making an economic profit. 
D)served by many firms each incurring an economic loss. 
E)a natural monopoly.

Quizplus · Accepted Answer

The figure shows a natural monopoly with a cost structure that only allows one firm to produce efficiently at the quantity demanded by the market. Other firms would incur higher costs and make economic losses. Therefore, this market is served by a single firm as a natural monopoly.

Use the Figure Below to Answer the Following Question