The graph to the right shows the demand and cost curves for a natural monopoly. 1.) Using the point tool, identify the firm's price and quantity if the monopolist is required to set a marginal cost price. Label the point 'MC' 2.) Using the rectangle drawing tool, identify the firm's profit or loss at that price. Properly label the object. Carefully follow the instructions above, and only draw the required objects. A regulated monopolist that was required to set this price would A. make a positive profit. OB. exit the industry. C. make a profit of zero. OD. None of the above. Price ($ per unit) + LAC LMC MR D Output (thousands of units) 10
The graph to the right shows the demand and cost curves for a natural monopoly. 1.) Using the point tool, identify the firm's price and quantity if the monopolist is required to set a marginal cost price. Label the point 'MC' 2.) Using the rectangle drawing tool, identify the firm's profit or loss at that price. Properly label the object. Carefully follow the instructions above, and only draw the required objects. A regulated monopolist that was required to set this price would A. make a positive profit. OB. exit the industry. C. make a profit of zero. OD. None of the above. Price ($ per unit) + LAC LMC MR D Output (thousands of units) 10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The graph to the right shows the
demand and cost curves for a
natural monopoly.
1.) Using the point tool, identify
the firm's price and quantity if the
monopolist is required to set a
marginal cost price. Label the
point 'MC'.
2.) Using the rectangle drawing
tool, identify the firm's profit or loss
at that price. Properly label the
object.
Carefully follow the
instructions above, and only draw
the required objects.
A regulated monopolist that was
required to set this price would
A. make a positive profit.
B. exit the industry.
C. make a profit of zero.
D. None of the above.
Price ($ per unit)
9-
3-
LAC
2-
LMC
MR
D
Output (thousands of units)
10
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