What the firm will do if the regulated price for a natural
Answer to Problem 7MCQ
From the available options, the correct option is to shut down in the long run.
Explanation of Solution
The company will surely shut down in the long run when the regulated price for a natural monopoly is fixed where the marginal cost curve intersects the demand curve because it will not possible for the firm to generate economic profit in the long run. Here, all options of profits, increase in the output, MR =
Therefore, the correct option is a (shutdown in the long run).
Introduction: A monopoly that involves high start-up costs and barriers to entry and provides the largest supplier in any industry is called a natural monopoly because it covers powerful economies of scale to conduct the business. A person who has a monopoly on the business is called a monopolist.
Chapter 77 Solutions
Krugman's Economics For The Ap® Course
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