curve, the marginal-cost (MC) curve, and the average-total-cost (ATC) curve for the local gas 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. 20 18 Monopoly Outoome 16 14 12 10 "ATC MC MR 2 3 7. 10 QUANTITY (Hundreds of cubic metres) Which of the following statements are true about this natural monopoly? Check all that apply. The gas company is experiencing economies of scale. O In order for a monopoly to exist in this case, the government must have intervened and created it. O The gas company is experiencing diseconomies of scale. O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government regulation, natural monopolies can earn positive profit in the long run. True O False PRICE (Dollars per hundred cubic metres)

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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The following graph shows the demand (D) for gas 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 gas company, a natural monopolist.
 
NOTE: read question carefully and answer accordingly 
The following graph shows the demand (D) for gas 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 gas 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.
20
18
Monopoly Outcome
16
14
12
10
ATC
MC
MR
1
2
3
4
6
7
9
10
QUANTITY (Hundreds of cubic metres)
Which of the following statements are true about this natural monopoly? Check all that apply.
The gas company is experiencing economies of scale.
In order for a monopoly to exist in this case, the government must have intervened and created it.
O The gas company is experiencing diseconomies of scale.
It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.
True or False: Without government regulation, natural monopolies can earn positive profit in the long run.
True
O False
PRICE (Dollars per hundred cubic metres)
Transcribed Image Text:The following graph shows the demand (D) for gas 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 gas 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. 20 18 Monopoly Outcome 16 14 12 10 ATC MC MR 1 2 3 4 6 7 9 10 QUANTITY (Hundreds of cubic metres) Which of the following statements are true about this natural monopoly? Check all that apply. The gas company is experiencing economies of scale. In order for a monopoly to exist in this case, the government must have intervened and created it. O The gas company is experiencing diseconomies of scale. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government regulation, natural monopolies can earn positive profit in the long run. True O False PRICE (Dollars per hundred cubic metres)
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