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1. Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's marginal revenue (MR),

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1. Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 80 70 60 PRICE (Dollars per subscription) 8 8 30 20 ATC 10 MC MR D 2 6 8 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Pricing Short Run Decision Long-Run Decision Mechanism Quantity Price Profit Profit Maximization Marginal-Cost Pricing Average-Cost Pricing

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