To maximize profit,a natural monopolist produces the level of output at which

Question

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A natural monopolist faces a downward-sloping demand curve, which means that in order to sell more units of output, it must lower the price for all units sold. As a result, a natural monopolist cannot charge a price equal to its marginal cost, as it would be operating at a loss. It also cannot charge a price equal to its average total cost, as it would not be making a profit. The profit-maximizing level of output is where marginal revenue equals marginal cost, as this is where the monopolist is producing the amount of output that generates the highest possible profit.

To Maximize Profit,a Natural Monopolist Produces the Level of Output