=+ 9. This diagram illustrates your local electricity companys natural monopoly. It shows the demand curve for

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=+ 9. This diagram illustrates your local electricity company’s natural monopoly. It shows the demand curve for kilowatt-hours (kWh) of electricity, the company’s marginal revenue (MR) curve, its marginal cost (MC) curve, and its average total cost (ATC) curve. The government wants to regulate the monopolist by imposing aprice ceiling.

Price of kWh

$1.30

0 5 8 10 13 Quantity of kWh (thousands)

Krugman/Wells, Microeconomics, 5e,

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