3. Natural monopoly analysisThe following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows themarginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV company, a naturalmonopolist.On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.PRICE (Dollars per subscription)1009080706050403020100024MRTrue10 12 14QUANTITY (Number of subscriptions)16FalseATCMC18 20DWhich of the following statements are true about this natural monopoly? Check all that apply.Monopoly OutcomeIn 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.The satellite TV company must own a scarce resource.The satellite TV company is experiencing economies of scale.True or False: Without government regulation, natural monopolies can earn positive profit in the long run.

Natural Monopoly: A natural monopoly exists when it is most efficient to have single firm operating…

3. Natural monopoly analysis The following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV company, a natura monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. ? PRICE (Dollars per subscription) 100 8 8 80 60 9 0 2 MR 6 8 10 QUANTITY (Number of subscriptions) 12 ATC MO 16 18 20 D Monopoly Outcome Which of the following statements are true about this natural monopoly? Check all that apply. 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. The satellite TV company must own a scarce resource. The satellite TV company is experiencing economies of scale. True or False: Without government regulation, natural monopolies can earn positive profit in the long run.

3. Natural monopoly analysis The following graph gives the demand (D) curve for satellite TV services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local satellite TV company, a natura monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. ? PRICE (Dollars per subscription) 100 8 8 80 60 9 0 2 MR 6 8 10 QUANTITY (Number of subscriptions) 12 ATC MO 16 18 20 D Monopoly Outcome Which of the following statements are true about this natural monopoly? Check all that apply. 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. The satellite TV company must own a scarce resource. The satellite TV company is experiencing economies of scale. True or False: Without government regulation, natural monopolies can earn positive profit in the long run.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 9PA

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Similar questions

What is a natural monopoly?
Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
In what sense is a natural monopoly natural?
Can you think of any examples of successful predatory pricing in the real world?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
What is the usual shape of a total revenue curve for a monopolist? Why?
Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?
Suppose the market for Hula Hoops is monopolized by a single firm. a. Draw the initial equilibrium for such a market. b. Now suppose the demand for Hula Hoops shifts outward slightly. Show that, in general (contrary to the competitive case), it will not be possible to predict the effect of this shift in demand on the market price of Hula Hoops. c. Consider three possible ways in which the price elasticity of demand might change as the demand curve shifts: It might increase, it might decrease, or it might stay the same. Consider also that marginal costs for the monopolist might be increasing, decreasing, or constant in the range where MR=MC Consequently, there are nine different combinations of types of demand shifts and marginal cost slope configurations. Analyze each of these to determine for which it is possible to make a definite prediction about the effect of the shift in demand on the price of Hula Hoops.
From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)