A natural monopoly is defined as an industry in which one firm can produce the entire industry output at a lower average cost than a larger number of firms could. can produce the entire industry output at a lower marginal cost than a larger number of firms could. is very large relative to other firms that could enter the industry. can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industm

A natural monopoly is defined as an industry in which one firm can produce the entire industry output at a lower average cost than a larger number of firms could. can produce the entire industry output at a lower marginal cost than a larger number of firms could. is very large relative to other firms that could enter the industry. can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industm

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 4MC

See similar textbooks

Similar questions

A natural monopoly results when: a firm controls a raw material that is essential to produce a product O a firm's long-run average cost declines over the entire range of market demand O a firm has developed the technology to produce a product that only it knows how to produce a firm has a patent that allows it to be the only producer of a product
None
Is this a natural monopoly?
When comparing a monopoly to a perfectly competitive industry at the equilibrium point, we find that monopoly is: inefficient because it generates less output. is neither efficient nor inefficient. inefficient because it charges lower prices. O efficient because it generate more output due to economies of scale.
Suppose that a monopoly becomes a perfectly competitive industry. As a result, consumer surplus will increase producer surplus will remain unchanged decrease increase
When used with a natural monopoly, an average cost pricing rule results in economic losses for the firm the efficient level of output O zero economic profit for the firm
Suppose that a monopoly is currently producing the quantity at which marginal revenue exceeds marginal cost. The monopoly can increase its profit by raising its price and decreasing its output lowering its price and decreasing its output lowering its price and increasing its output raising its price and increasing its output shutting down
Where the average total cost curve for a natural monopoly crosses the demand * curve, O the marginal cost curve is below the ATC O the ATC is rising O the MR curve is rising O the MR curve also crosses the demand curve O the MC curve also crosses the demand ccurve
Under a marginal cost pricing rule, a natural monopoly makes zero economic profit incurs an economic loss makes positive economic profit
Show that if a firm is a natural monopoly, a government policy that forces marginal cost pricing will result in losses for the firm.
The supply curve for a monopoly is: O the portion of the marginal cost curve that lies above the average fixed cost curve. the portion of the marginal cost curve that lies above the average variable cost curve. Ononexistent. O the portion of the marginal cost curve that lies above the average total cost curve.
The graph shows the relevant curves for a natural monopoly. Assume that in regulating this monopoly, policy makers have directed the firm to follow an average cost pricing rule, where there is a regulated fair-return price. What is the firm's profit? If the firm is losing money, express the loss as a negative number. Round to the nearest penny. Price ($) 36.9 31.6 25.9 22.6 18.5 16.7 15.2 11.7 10.3 Marginal revenue 11.1 16.5 29.5 Average cost Marginal cost Demand 37.5 Quantity $