**Figure 15-8**The graph illustrates a natural monopoly with the following components:- **Axes**: The vertical axis represents "Price," and the horizontal axis represents "Quantity." - **Curves and Lines**: - The **Demand** curve is downward sloping from point A to point D. - The **Marginal Revenue (MR)** curve lies below the Demand curve, starting from point H and extending downward. - The **Average Total Cost (ATC)** curve intersects the Demand curve at point G. - The **Marginal Cost (MC)** curve intersects both the MR and Demand curves, passing through point C and extending to point D.- **Points**: - **B** and **G** lie on the Demand curve. - **C** lies on the intersection of the MR and MC curves. - **J**, **K**, and **L** represent different quantities on the horizontal axis where vertical lines intersect curves or points mentioned.**Question**:Refer to Figure 15-8. What is the socially efficient price and quantity for this natural monopolist?- ○ F and K- ○ D and J- ○ A and J- ○ H and L

A natural monopolist aims at profit maximization and in order to do so, it producers and sells at the point where the marginal revenue earned from producing and selling extra unit of output equals the marginal cost of producing it. In the above figure marginal cost is constant at H. The marginal revenue equals the marginal cost at point C; the point then traced to the demand curve is point B. Thus, a natural monopolist's efficient quantity and price at point B is J and A respectively. Thus, the correct option is option (c)

Answered: АТС MC MR QUANTITY Refer to Figure…

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АТС MC MR QUANTITY Refer to Figure 15-8. What is the socially efficient price and quantity for chis natural monopolist? F and K D and J A and J H and L PRICE

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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