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 1,000 1,400 Total profit 1,200 Average QUE 1,000 Marginal Cost Marginal Revenue 800 600 400 200 Marginal revenue 3 Quantity1 800 Total CostTotal Revenue () 1 000 400 1 Quanally Cost Information Revenue Information Total Marginal Average Total Quantity Marginal Cost Cost Cost Quantity Price Revenue Revenue 1,500 1,500 1,200 1.200 1,800 300 90O 1,100 2.200 1,000 2,200 400 753 1,000 3,000 800 2700 500 475 900 3,400 800 DYOUUN 3,300 600 640 BOO 4,000 400 4 200 900 700 700 4 200 200 5,400 1,200 771 600 4.200 7 200 1,800 900 500 4,000Step 2: Look at demand curve to see what price to charge Marginal cost R Average cost Price ($) S Step 3: Identify profit Demand Step1: MR = MC Marginal revenue Quantity