Assume that Hydro One is the sole electricity distributor in Ontario, i.e. the market for distributing electricity is an actual monopoly. The demand of electricity is given by P = 250,000 – 3Q where Q the quantity is measured in Gigawatt-hour (GWh). The price is measured in dollars per GWh. The total cost of Hydro One is given by: Cost = + 90,000Q + 1,500,000,000 100 a. Distinguish between natural and legal monopolies. Is Hydro One legal or natural monopoly? Explain your answer. b. Draw the marginal revenue curve for Hydro One. c. Determine the profit maximizing level of output for Hydro One.

Assume that Hydro One is the sole electricity distributor in Ontario, i.e. the market for distributing electricity is an actual monopoly. The demand of electricity is given by P = 250,000 – 3Q where Q the quantity is measured in Gigawatt-hour (GWh). The price is measured in dollars per GWh. The total cost of Hydro One is given by: Cost = + 90,000Q + 1,500,000,000 100 a. Distinguish between natural and legal monopolies. Is Hydro One legal or natural monopoly? Explain your answer. b. Draw the marginal revenue curve for Hydro One. c. Determine the profit maximizing level of output for Hydro One.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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