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Figure: Monopoly 8
-(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:
A) 9 units of output.
B) 10 units of output.
C) 14 units of output.
D) 17.5 units of output.

Question

Use the following to answer questions:
Figure: Monopoly 8 
-(Figure: Monopoly 8) If the government set price equal to average cost, the natural monopolist in this figure would produce:
A) 9 units of output. 
B) 10 units of output. 
C) 14 units of output. 
D) 17.5 units of output.

Quizplus · Accepted Answer

When price is set equal to average cost, the monopolist produces where the average cost curve intersects the demand curve, which is at 14 units of output.

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