Figure 15-7 Figure 15-7 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 15-7.In the absence of any government regulation,the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Question

Figure 15-7  Figure 15-7 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 15-7.In the absence of any government regulation,the profit-maximizing 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 where the MR and MC curves intersect. In this case, it occurs at Q₁ units. The price charged will be the highest price the market is willing to pay for that quantity, which is P₁.

Figure 15-7 Figure 15-7 Shows the Market Demand and Cost