PRICE (Cents per Kilowatt-hour) 40 30 32 28 24 20 16 12 4 0 0 1 MR 8 4 5 6 7 QUANTITY (Thousands of kilowatt-hours) True ATC MC False 0 10 D Which of the following statements are true about this natural monopoly? Check all that apply. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. In order for a monopoly to exist in this case, the government must have intervened and created it. The electricity company must own a scarce resource. The electricity company is experiencing economies of scale. Monopoly Outcome True or False: Without government regulation, natural monopolies can earn positive profit in the long run.

PRICE (Cents per Kilowatt-hour) 40 30 32 28 24 20 16 12 4 0 0 1 MR 8 4 5 6 7 QUANTITY (Thousands of kilowatt-hours) True ATC MC False 0 10 D Which of the following statements are true about this natural monopoly? Check all that apply. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. In order for a monopoly to exist in this case, the government must have intervened and created it. The electricity company must own a scarce resource. The electricity company is experiencing economies of scale. Monopoly Outcome True or False: Without government regulation, natural monopolies can earn positive profit in the long run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A country that ends a 22-year old state monopoly in telecoms. The phone services market in this country is illustrated by the following equations: Demand: p = 80−q MC: p=−40+2q 1.Draw the the demand, the MR and the MC of the monopolist in the following graph. 2.Suppose a state monopoly on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation. 3.Now consider the situation after the abolition of the state monopoly. With the phone services market now competitive, the state is losing customers, and therefore also losing revenue as a result of new companies entering the market. To compensate for the drop in revenue, the government decides to impose an excise tax of $30 on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation. 4.Give an economic…
8. Natural monopoly analysis The following graph shows the demand (D) for electricity 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 electricity 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. 40 36 Monopoly Outcome 32 20 16 АТС -МС 12 8 MR D 0 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Thousands of kilowatt-hours) 28 24 PRICE (Cents per Kilowatt-hour)
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A country that ends a 22-year old state monopoly in telecoms. The phone services market in this country is illustrated by the following equations: Demand: p = 80−q MC: p=−40+2q 1.Draw the the demand, the MR and the MC of the monopolist in the following graph. 2.Suppose a state monopoly on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation. 3.Now consider the situation after the abolition of the state monopoly. With the phone services market now competitive, the state is losing customers, and therefore also losing revenue as a result of new companies entering the market. To compensate for the drop in revenue, the government decides to impose an excise tax of $30 on the phone services market. In this case, indicate the price paid by consumers and the quantity exchanged, and calculate the welfare loss compared to the optimal situation. 4.Give an economic…
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