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8. 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 natural 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) 822 SSRR MR 10 12. 14 QUANTITY (Number of subscriptions) 16 MO 20 Monopoly Outcome

8. 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 natural 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) 822 SSRR MR 10 12. 14 QUANTITY (Number of subscriptions) 16 MO 20 Monopoly Outcome

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 15CQ
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8. 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 natural 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) 888 282 28 70 00 50 40 30 MR 16 15 14 QUANTITY (Number of subscriptions) 20 D Monopoly Outcome → Which of the following statements are true about this natural monopoly? Check all that apply.
Transcribed Image Text:8. 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 natural 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) 888 282 28 70 00 50 40 30 MR 16 15 14 QUANTITY (Number of subscriptions) 20 D Monopoly Outcome → Which of the following statements are true about this natural monopoly? Check all that apply.
PRICE (Dollars per subsc 8 8 8 8 8 g MR 10 12 14 16 QUANTITY (Number of subscriptions) ATC 18 20 D Which of the following statements are true about this natural monopoly? Check all that apply. 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 is experiencing diseconomies of scale. In order for a monopoly to exist in this case, the government must have intervened and created it. 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. O True O False
Transcribed Image Text:PRICE (Dollars per subsc 8 8 8 8 8 g MR 10 12 14 16 QUANTITY (Number of subscriptions) ATC 18 20 D Which of the following statements are true about this natural monopoly? Check all that apply. 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 is experiencing diseconomies of scale. In order for a monopoly to exist in this case, the government must have intervened and created it. 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. O True O False
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