The accompanying graph represents a hypothetica naturalNatural Monopolymonopoly10a. Place point A at the price and quantity where the firm willmaximize profits.b. Place point B at the point of cost-plus regulation when the7firm makes no profit.мс|c. What price would the monopolist set without any marketintervention? Round to the nearest dollar.ATCSMRd. At this price, how much profit would the monopolistmake? Round to the nearest dollar.246810121416 1820QuantityS

Question
Asked Aug 7, 2019
The accompanying graph represents a hypothetica natural
Natural Monopoly
monopoly
10
a. Place point A at the price and quantity where the firm will
maximize profits.
b. Place point B at the point of cost-plus regulation when the
7
firm makes no profit.
мс|
c. What price would the monopolist set without any market
intervention? Round to the nearest dollar.
ATC
S
MR
d. At this price, how much profit would the monopolist
make? Round to the nearest dollar.
2
4
6
8
10
12
14
16 18
20
Quantity
S
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The accompanying graph represents a hypothetica natural Natural Monopoly monopoly 10 a. Place point A at the price and quantity where the firm will maximize profits. b. Place point B at the point of cost-plus regulation when the 7 firm makes no profit. мс| c. What price would the monopolist set without any market intervention? Round to the nearest dollar. ATC S MR d. At this price, how much profit would the monopolist make? Round to the nearest dollar. 2 4 6 8 10 12 14 16 18 20 Quantity S

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Expert Answer

Step 1

Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts you’d like answered.

Step 2

Natural Monopoly: A natural monopoly is a type of monopoly that arises with a high fixed cost. For example, the firm that supply electricity has a high fixed cost of spreading cables and power grids. Secondly, the railway is another example of a natural monopoly because it requires a huge initial fixed cost investment.

Step 3

The profit-maximizing level exists at the point where the marginal revenue curve cuts the marginal cost curve. Thus, point “A” ...

10
Natural Monopoly
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10 Natural Monopoly MC ATC A MR 8 10 12 14 16 18 20 Quantity Price

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