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 18 14 12 10 ATC MC MR 2 3 4 5 6 7 8 10 QUANTITY (Hundreds of cubic feet) Which of the following statements are true about this natural monopoly? Check all that apply. O The gas company is experiencing economies of scale. The gas company must own a scarce resource. O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. O The gas company is experiencing diseconomies of scale. True or False: Without government regulation, natural monopolies always earn zero profit in the long run. O True False PRICE (Dollars per hundred cubic feet)

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 18 14 12 10 ATC MC MR 2 3 4 5 6 7 8 10 QUANTITY (Hundreds of cubic feet) Which of the following statements are true about this natural monopoly? Check all that apply. O The gas company is experiencing economies of scale. The gas company must own a scarce resource. O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. O The gas company is experiencing diseconomies of scale. True or False: Without government regulation, natural monopolies always earn zero profit in the long run. O True False PRICE (Dollars per hundred cubic feet)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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