On the following graph, use the black point (plus symbol) to indicate the profit-maximising price and quantity for this natural monopolist.

Question

Question

On the following graph, use the black point (plus symbol) to indicate the profit-maximising price and quantity for this natural monopolist.

Which of the following statements are true about this natural monopoly? Check all that apply

In order for a monopoly to exist in this case, the government must have intervened and created it.
The pay TV company is experiencing diseconomies of scale
The pay TV company is experiencing economies of scale
It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.

True or False: Without government regulation, natural monopolies always earn zero profit in the long run.

True
False

business economics

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Answer 1

Answer #1

1) The pay TV company is experiencing economies of scale. It is because ATC is decreasing beyond this output.

It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.

2) True

Government regulation in natural monopoly gives firm profit because if more firms enter then profit falls to zero in the long run.

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Answer 2

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On the following graph, use the black point (plus symbol) to indicate the profit-maximising price and quantity for this natural monopolist.

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Add Answer to: On the following graph, use the black point (plus symbol) to indicate the profit-maximising price and quantity for this natural monopolist.

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On the following graph, use the black point (plus symbol) to indicate the profit-maximising price and quantity for this natural monopolist.