Exhibit 15.1

-Refer to Exhibit 15.1,which shows the cost and revenue curves for a natural monopolist-the operator of a subway system.If regulators could set the price at $1.50 per trip,the subway would sell ____ trips per month.

Question

Exhibit 15.1
 
-Refer to Exhibit 15.1,which shows the cost and revenue curves for a natural monopolist-the operator of a subway system.If regulators could set the price at $1.50 per trip,the subway would sell ____ trips per month.

Quizplus · Accepted Answer

At $1.50 per trip, the subway system will operate at the point where the marginal cost curve intersects the demand curve, which is at a quantity of 200 million trips per month. This is the point where the total revenue curve intersects the total cost curve, and represents the maximum profit the natural monopolist can earn at that price.

Exhibit 15.1 -Refer to Exhibit 15.1,which Shows the Cost and Revenue Curves