Figure 8-13 Figure 8-13 shows the market demand and cost curves facing a natural monopoly.
-Refer to Figure 8-13.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of ________ 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.If the regulators of the natural monopoly allow the owners of the firm to break even on their investment,the firm will produce an output of ________ and charge a price of ________.

Quizplus · Accepted Answer

To break even, the firm will produce the output at the point where average total cost (ATC) crosses the demand curve. This occurs at point E in the graph, where output is Q₃ and price is P₃. Therefore, the correct answer is (D) Q₃ units; P₃.

Figure 8-13 Figure 8-13 Shows the Market Demand and Cost