Viscusi Chapter 14 Problem 1

1 . A firm's cost of producing Q units of output is C(Q) = 100 + Q +02. This cost function generates a U-shaped average cost curve with minimum efficient scale at O= 10. Determine whether this industry is a natural monopoly when the market demand function is: a. Q(P) = 100-3P. b. Q(P) = 10-0.1P