The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginalrevenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water 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 hundred cubic feet)40363228242016124001235 678QUANTITY (Hundreds of cubic feet)MR4TrueATCMCO False910DThe water company is experiencing economies of scale.Which of the following statements are true about this natural monopoly? Check all that apply.+Monopoly OutcomeThe water company must own a scarce resource.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.True or False: Without government regulation, natural monopolies always earn zero profit in the long run.

“Since you have posted multiple questions, we will provide the solutiononly to the first question as…

Which of the following statements are true about this natural monopoly? Check all that apply. The water company is experiencing economies of scale. The water company must own a scarce resource. 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.

Which of the following statements are true about this natural monopoly? Check all that apply. The water company is experiencing economies of scale. The water company must own a scarce resource. 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following graph gives the demand (D) curve for water 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 water 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 hundred cubic feet)
40
36
32
28
24
20
16
12
4
0
0
1
2
3
5 6
7
8
QUANTITY (Hundreds of cubic feet)
MR
4
True
ATC
MC
O False
9
10
D
The water company is experiencing economies of scale.
Which of the following statements are true about this natural monopoly? Check all that apply.
+
Monopoly Outcome
The water company must own a scarce resource.
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.
True or False: Without government regulation, natural monopolies always earn zero profit in the long run.

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