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6/19/22, 5:36 PM Aplia: Student Question https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=594370205413401683037472468&eISBN=9781337096577&id=1507053691&snap… 1/2 Points: 0 / 1 Close Explanation Points: 1 / 1 Close Explanation Back to Assignment Attempts 2 Keep the Highest 2 / 3 8. Natural monopoly analysis The following graph shows the demand (D) for cable services in the imaginary town of Utilityburg. 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. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. Explanation: A natural monopolist chooses its quantity of production by setting marginal revenue equal to marginal cost, which, in this case, occurs at a quantity of 8 cable subscriptions. The natural monopolist will then charge the maximum price that it can charge ($60.00), which is the price on the demand curve that corresponds to a quantity of 8 cable subscriptions. Which of the following statements are true about this natural monopoly? Check all that apply. Explanation: Your Answer Monopoly Outcome 0 2 4 6 8 10 12 14 16 18 20 100 90 80 70 60 50 40 30 20 10 0 PRICE (Dollars per subscription) QUANTITY (Number of subscriptions) D MR MC ATC Correct Answer It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. The cable company must own a scarce resource. The cable company is experiencing diseconomies of scale. The cable company is experiencing economies of scale.