Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 9.13.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Question

Figure 9.13  Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 9.13.Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Quizplus · Accepted Answer

Producing at the economically efficient output level means setting price equal to marginal cost, which for a natural monopoly is typically below average total cost due to high fixed costs and economies of scale. This situation leads to losses because the price does not cover the average total cost.

Figure 913 Figure 9