1.Why isn't a monopolist a price taker?

2. A. To sell more what must a monopolist do?

B. What does this mean in terms of marginal revenue?

3. What situation allows for a natural monopoly to exist?

4. If there is only one producer of a service due to a natural monopoly, how do societies ensure that the natural monopolist does not earn large monopoly profits?

5 .Using the following graph

1.800 Marginal cost Marginal Cost Marginal Revenue 1,600 1,400 Total profit 1,200 Average cost 1,000 800 600 400 Demand 200 Marginal revenue -200 NO 09 5 6 9 QuantityTotal Cost/Total Revenue ($) 1 600 Marginal cost 1 400 1200 Marginal revenue Maximum 1,000 possible 800 profit 600 400 200 -200 1 2 3 4 5 6 7 Quantity Cost Information Revenue Information Total Marginal Average Total Quantity Cost Cost Cost Marginal Quantity Price Revenue Revenue ONOURON- 1,500 1,500 1,200 1.200 1,800 300 900 1, 100 2,200 1,000 2,200 400 733 1,000 3,000 2,700 500 675 900 600 3,300 600 660 800 400 700 ONOURON- 3,600 4,000 4,200 900 700 4,200 200 5,400 1,200 771 600 4,200 0 7,200 1,800 900 500 4,000 -200Step 2: Look at demand curve to see what price to charge Marginal cost R Average cost Price ($) S Step 3: Identify profit Step1: MR = MC Demand Marginal revenue Q 1 Quantity