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8. Natural monopoly analysis The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the
8. Natural monopoly analysis The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas 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. 20 18 Monopoly Outcome 16 14 12 PRICE (Dollars per hundred cubic feet) 10 CO ATC 6 MC 220 la 16 Monopoly Outcome 1.: 12 10 PRICE (Dollars per hundred cubic feet) o 1 2 3 4 5 a 7 a 9 10 QUANTITY (Hundreds of cubic feet) Which of the following statements are true about this natural monopoly? Check all that apply. MR D o 1 2 3 4 5 o 'r' a 9 1o QUANTITY (Hundreds of cubic feet) Which of the following statements are true about this natural monopoly? Check all that apply. D The gas company must own a scarce resource. D In order for a monopoly to exist in this case' the government must have intervened and created it. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. D The gas company.I is experiencing diseconomies of scale. True or False: Without government regulation, natural monopolies never earn zero prot in the long run. 0 True 0 False N Save 8: Continue Continue without saving
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