Refer to the graph above If a natural monopolist were not regulated the firm

# Refer to the graph above if a natural monopolist were

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118. Refer to the graph above. If a natural monopolist were not regulated, the firm would charge: A.P1.B. P2.C. P3.D. P4. The firm would produce that output where MC = MR. To find the selling price, one must go from that output to the demand curve. AACSB: Analytic BLOOM'S TAXONOMY: Application Difficulty: Medium Learning Objective: 15-6 Topic: Natural Monopoly 15-106
Chapter 15 - Monopoly 119. Refer to the graph above. If the government set the selling price equal to the marginal cost, the firm in the graph would be: At price P4, the average cost is greater than the average revenue, so the firm is sustaining losses. AACSB: Analytic BLOOM'S TAXONOMY: Application Difficulty: Medium Learning Objective: 15-6 Topic: Natural Monopoly 120. If government regulators want a natural monopolist to earn only zero economic profit, then they will set price equal to: Profit is price minus ATC times quantity. If regulators want the monopolist to earn no economic profit, they would set P = ATC. AACSB: Analytic BLOOM'S TAXONOMY: Comprehension Difficulty: Easy Learning Objective: 15-6 Topic: Natural Monopoly 15-107
Chapter 15 - Monopoly 121. Refer to the above graph of average costs for a typical firm. The lowest per-unit costs forthe industry could be achieved if: In this case, average total costs are falling throughout. The largest output will result in the lowest per unit costs. AACSB: Analytic BLOOM'S TAXONOMY: Application Difficulty: Easy Learning Objective: 15-6 Topic: Natural Monopoly 15-108
Chapter 15 - Monopoly 122. Refer to the above graph of average costs for a typical firm. The per-unit cost of the industry would be \$8 if: A. two firms produced 250 units of output each.B.one firm produced 500 units of output.C. two firms produced 333 units of output each.D. one firm produced 667 units of output. Per unit costs are \$8 for output of 500. AACSB: Analytic BLOOM'S TAXONOMY: Application Difficulty: Easy Learning Objective: 15-6 Topic: Natural Monopoly

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