5% MINDTAP Homework (Ch 15) 8. Natural monopoly analysis The following graph sho

Question

5% MINDTAP Homework (Ch 15) 8. Natural monopoly analysis The following graph shows the demand (D) for electricity services in the imaginary town of ubilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the locall electricity company, a natural monopolist On the following araph, use the black point (plus symbol) to indkcate the profit maxcimizing price and quantity for this natural monopolist. Monopoly Outcome 24 20 12 UR O Type here to search

Explanation / Answer

Which are true about natural monopoly?

Without Government regulations, Governments can earn positive profits in the long run - True

Market competition does not work in case of a Natura Monopoly. Government regulation can thus come into the picture to avoid an unregulated monopoly.

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