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Depict graphically a total cost curve TC =f+c•Qwhere f> 0 is the fixed cost, i.e., TC(0) = f, and c is marginal cost. a) Depict this Total Cost curve graphically in a fully labelled diagram. b) In a separate diagram, depict the marginal cost curve as well as the average cost curve. c) If a firm with these cost curves happened to be the only firm in the industry, would the firm be a natural monopoly? ('yes' or 'no'). Explain, to justify your answer.

Depict graphically a total cost curve TC =f+c•Qwhere f> 0 is the fixed cost, i.e., TC(0) = f, and c is marginal cost. a) Depict this Total Cost curve graphically in a fully labelled diagram. b) In a separate diagram, depict the marginal cost curve as well as the average cost curve. c) If a firm with these cost curves happened to be the only firm in the industry, would the firm be a natural monopoly? ('yes' or 'no'). Explain, to justify your answer.

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section12.3: The Various Measures Of Cost
Problem 3QQ
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6. Depict graphically a total cost curve TC = f+c•Qwhere f>0 is the fixed cost, i.e., TC(0) = f, and c is marginal cost. a) Depict this Total Cost curve graphically in a fully labelled diagram. b) In a separate diagram, depict the marginal cost curve as well as the average cost curve. c) If a firm with these cost curves happened to be the only firm in the industry, would the firm be a natural monopoly? ('yes' or 'no'). Explain, to justify your answer.
Transcribed Image Text:6. Depict graphically a total cost curve TC = f+c•Qwhere f>0 is the fixed cost, i.e., TC(0) = f, and c is marginal cost. a) Depict this Total Cost curve graphically in a fully labelled diagram. b) In a separate diagram, depict the marginal cost curve as well as the average cost curve. c) If a firm with these cost curves happened to be the only firm in the industry, would the firm be a natural monopoly? ('yes' or 'no'). Explain, to justify your answer.
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