Figure 15.4 shows the revenue and cost curves for a natural monopolist. The monopolist will set the price equal to _____ if it is allowed to earn only a normal profit.
Figure 15.4

Question

Figure 15.4 shows the revenue and cost curves for a natural monopolist. The monopolist will set the price equal to _____ if it is allowed to earn only a normal profit. ​
Figure 15.4
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Quizplus · Accepted Answer

If the monopolist is allowed to earn only a normal profit, it will produce where the average cost (AC) curve intersects with the demand curve (D). This occurs at point C, where the price is equal to P1 and the monopolist produces Q1 units. At this point, the monopolist earns a normal profit (where total revenue = total cost) but does not earn any economic profit.

Figure 154 Shows the Revenue and Cost Curves for a Natural