Figure 8.13 Figure 8.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 8.13.In the absence of any government regulation,the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Question

Figure 8.13  Figure 8.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 8.13.In the absence of any government regulation,the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Quizplus · Accepted Answer

The profit-maximizing output level is where marginal revenue (MR) equals marginal cost (MC), which is at quantity Qs1U1B11S1U1B0. This output level also corresponds to the intersection of the demand curve and the average total cost curve. The corresponding price is Ps1U1B11S1U1B0.

Figure 813 Figure 8