Regulating a natural monopoly: Consider the local telephone 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...
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...
9. Regulating a natural monopoly 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), 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. Complete the second row of the previous table. Suppose that the government forces the monopolist to set...
12) Your local water company is a considered A) a natural monopoly and will be regulated. B) an oligopoly and will be able to charge a price greater than marginal cost. C) monopoly and will not be able to charge a price greater than marginal revenue. D) perfect competition because everyone needs tap water. E) monopolistic competition and will be able to charge a price greater than marginal cost. 13) A barrier to entry is A) the economic term for...
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...
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...
A local electric utility provider is a considered by regulators to be a natural monopoly. It has fixed costs of $100 million and a constant marginal cost of $0.25 per KWH. Its demand curve is linear: ?=160−0.00001? where ? is the price per KWH and Q is the quantity demanded by consumers in KWH per year. a. Confirm that this utility provider is a natural monopoly. [HINT: It might be helpful to use Excel for this exercise.] b. Find the...
a natural monopoly
The reason to regulate a natural monopoly is that a natural monopoly ______________ produce an economically efficient amount of output, ______________ charge a higher price than the perfectly competitive industry, and ______________ have lower average costs than a perfectly competitive industry. A Will not; may; will B Will; will; will C Will not; will not; will not D Will not; will; will E Will; will not; may