Figure 9.13 Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 9.13.In the absence of any government regulation, the profit-maximising owners of this firm will produce ________ units and charge a price of ________.

Question

Figure 9.13  Figure 9.13 shows the market demand and cost curves facing a natural monopoly.
-Refer to figure 9.13.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 is where marginal cost (MC) intersects with marginal revenue (MR) which is at point Qs1U1B11. The corresponding price can be found by drawing a vertical line from Qs1U1B11 to the demand curve, which gives us Ps1U1B11. Therefore, the profit-maximizing owners of the firm will produce Q₁ units and charge a price of P₁.

Figure 913 Figure 9