Suppose that the quantity of natural gas demanded in a city is 70 billion cubic meters when the price is $0.24 per cubic meter. The table below shows the total costs for a firm supplying natural gas to this market. Is the firm a natural monopoly? Quantity (billion m³) 20 30 40 50 60 70 Total cost ($ billion) 4.5 6.5 9.0 12.0 15.5 19.5 No, because two or more firms could satisfy the entire market demand at a lower total cost than a single firm can. No, because two or more firms could satisfy the entire market demand at a lower average total cost than a single firm can. Yes, because a single firm can satisfy the entire market demand at a lower total cost than two or more firms could. Yes, because a single firm can satisfy the entire market demand at a lower average total cost than two or more firms could.

Suppose that the quantity of natural gas demanded in a city is 70 billion cubic meters when the price is $0.24 per cubic meter. The table below shows the total costs for a firm supplying natural gas to this market. Is the firm a natural monopoly? Quantity (billion m³) 20 30 40 50 60 70 Total cost ($ billion) 4.5 6.5 9.0 12.0 15.5 19.5 No, because two or more firms could satisfy the entire market demand at a lower total cost than a single firm can. No, because two or more firms could satisfy the entire market demand at a lower average total cost than a single firm can. Yes, because a single firm can satisfy the entire market demand at a lower total cost than two or more firms could. Yes, because a single firm can satisfy the entire market demand at a lower average total cost than two or more firms could.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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