The following graph shows the demand (D) for gas services in the imaginary town
ID: 1210848 • Letter: T
Question
The following graph shows the demand (D) for gas services in the imaginary town of Utility burg. 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. Which of the following statements are true about this natural monopoly? Check all that apply. The gas company is experiencing diseconomies of scale. The gas company is experiencing economies of scale. The gas company must own a scarce resource. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government regulation, natural monopolies can earn positive profit in the long run.Explanation / Answer
It is more efficient ..... AND The electric company is experiencing economies of scale. (Opton b and d)
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