9. Regulating a natural monopoly Consider the local cable company, a natural monopoly
9. Regulating a natural monopoly
Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.
Complete the first row of the following table.
Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table.
Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table.
True or False: Under the average-cost pricing policy, the cable company has no incentive to cut costs.
Homework Answers
| PM | Q | P | Profit | Long run decision |
| Profit-Maximization | 7000 | 45 | positive | stay in the business |
| Marginal cost | 14000 | 10 | negative | exit the industry |
| Average cost | 13000 | 15 | zero | stay or exit |
The statement is True as the company is able to recover all its cost and earning normal profit
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9. Regulating a natural monopoly Consider the local cable company, a natural monopoly
Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services
16. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's marginal-revenue (MR), marginal-cost (MC), and average-total-cost (ATC) curves. Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous...
Consider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services and the company's marginal revenue (MR)
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please make sure you answer all the questions, thank you 9. Regulating a natural monopoly Consider...
please make sure you answer all the questions, thank you
9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following araph shows the monthly demand curve for phone services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves 100 90 80 70 60 50 40 ATC MO 30 20 10 MRI I 20 16 18 4 6 810 12 14 2 QUANTITY (Thousands of subscriptions) PRICE (Dollars per sub...
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Under the average-cost pricing policy, the cable...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for...
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Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), Its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE (Dollars per month) 200 180 ATC 160 140 120 100 Demand 80 60 40 MC 20 MR - 0 6 12 18 24 30 36 42...
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please make sure you answer all the questions, thank you
9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following araph shows the monthly demand curve for phone services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves 100 90 80 70 60 50 40 ATC MO 30 20 10 MRI I 20 16 18 4 6 810 12 14 2 QUANTITY (Thousands of subscriptions) PRICE (Dollars per sub...
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Under the average-cost pricing policy, the cable...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE, COST, MR (Dollars per month) 100 90 80 70 60 Demand 50 40 30 ATC 20 MC 10 MR 54 60 30 36 42 48 0...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), Its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE (Dollars per month) 200 180 ATC 160 140 120 100 Demand 80 60 40 MC 20 MR - 0 6 12 18 24 30 36 42...
The column choices are the same for
each, I have posted a picture of each columns choices as they can
be used for that same column.
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The following graph shows the demand (D) for cable services in a particular town. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local cable company, a natural monopolist. PRICE AND COSTS (Dollars per subscription P4 ATC PI Mc MR 1 02 03 QUANTITY İ Number of subscriptions! Based solely on the graph, which of the following prinopal tvpes of barriers to entry is the natural...
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