The figure below shows revenue and cost curves of a natural monopoly firm.Figure 14.1

In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-Refer to Figure 14.1. The natural monopolist will charge a price equal to:

Question

The figure below shows revenue and cost curves of a natural monopoly firm.Figure 14.1

In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-Refer to Figure 14.1. The natural monopolist will charge a price equal to:

Quizplus · Accepted Answer

A natural monopolist sets the price where the marginal revenue equals the marginal cost to maximize profit. In the given figure, the intersection of the marginal revenue curve (MR) and marginal cost curve (MC) occurs at point E, where output is Q1 and price is P1. Therefore, P₂ represents the price the monopolist will charge to maximize profit.

The Figure Below Shows Revenue and Cost Curves of a Natural