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Consider the local electricity company, a natural monopoly.

Consider the local electricity company, a natural monopoly. The graph shows the demand curve for kilowatt-hours (kWh) of electricity, the company's marginal revenue curve (labeled MR), the marginal cost curve (labeled MC), and the average total cost curve (labeled AC). The three gray stars mark the coordinates (20, 33), (20, 18), and (38, 10).

Graph is available
http://farm3.static.flickr.com/2705/4145138755_962da016ea_o.png


4.2. What is consumer surplus in the market for electricity at the monopolist's profit-maximizing output?



A. $800,000

B. $330,000

C. $450,000

D. $150,000

E. $270,000

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CH300410_495884_ECO.doc

Consider the local electricity company, a natural monopoly. The graph shows the demand
curve for kilowatt-hours (kWh) of electricity, the company's marginal revenue curve (labeled
MR), the marginal...

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