Economics 8. Natural monopoly analysisThe following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows themarginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV company, a naturalmonopolist.On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.PRICE (Dollars per subscription)8222222221006040300024MR81012 14QUANTITY (Number of subscriptions)16ATO18 20DMonopoly OutcomeWhich of the following statements are true about this natural monopoly? Check all that apply. 8PRICE (Dollars per subscri5040302010002461012 14QUANTITY (Number of subscriptions)FalseMR618ATOMQ10 20DWhich 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.The satellite TV company is experiencing diseconomies of scale.The satellite TV company is experiencing economies of scale.In order for a monopoly to exist in this case, the government must have intervened and created it.True or False: Without government regulation, natural monopolies never earn zero profit in the long run.O True

Natural Monopoly: A natural monopoly exists when it is most efficient to have single firm operating…

The following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV 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. PRICE (Dollars per subscription) 100 90 80 22222 60 40 Monopoly Outcome

The following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV 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. PRICE (Dollars per subscription) 100 90 80 22222 60 40 Monopoly Outcome

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Economics

8. Natural monopoly analysis
The following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows the
marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV 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.
PRICE (Dollars per subscription)
822222222
100
60
40
30
0
0
2
4
MR
8
10
12 14
QUANTITY (Number of subscriptions)
16
ATO
18 20
D
Monopoly Outcome
Which of the following statements are true about this natural monopoly? Check all that apply.

8
PRICE (Dollars per subscri
50
40
30
20
10
0
0
2
4
6
10
12 14
QUANTITY (Number of subscriptions)
False
MR
6
18
ATO
MQ
10 20
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.
The satellite TV company is experiencing diseconomies of scale.
The satellite TV company is experiencing economies of scale.
In order for a monopoly to exist in this case, the government must have intervened and created it.
True or False: Without government regulation, natural monopolies never earn zero profit in the long run.
O True

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