Question

In: Economics

Illustrate the graph for a natural monopoly. Where is output regulation on the graph?

Illustrate the graph for a natural monopoly. Where is output regulation on the graph?

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following graph...
9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the...
9. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph...
9. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the...
1.What is a natural monopoly? Explain with a graph how a regulated natural monopoly sets its...
1.What is a natural monopoly? Explain with a graph how a regulated natural monopoly sets its price.    2.Draw a graph that shows a monopoly firm making economic profit in the short run. Be sure your diagram includes the monopolist’s demand, marginal revenue, average total cost, and marginal cost curves. Be sure to indicate the profit maximizing output and price. Are these profits sustainable in the long run?   
9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following graph...
9. Regulating a natural monopoly Consider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.  Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.  Complete the first row of the following table.    Suppose that the government forces the monopolist to set the price...
9. Regulating a natural monopolyConsider the local telephone company, a natural monopoly. Thefollowing graph...
9. Regulating a natural monopolyConsider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services and the company’s marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.
What is a “natural” monopoly? How is that different from a “government created” monopoly? What is the role of regulation in monopolistic markets?
What is a “natural” monopoly? How is that different from a “government created” monopoly? What is the role of regulation in monopolistic markets? How and why does government exercise power over mergers and acquisitions? How does monopoly affect societal welfare?  
Question 2 – Government Intervention as Natural Monopoly Regulation Sometimes governments intervene with the markets; the...
Question 2 – Government Intervention as Natural Monopoly Regulation Sometimes governments intervene with the markets; the reason for the intervention might be a concern about allocative efficiency, or production inefficiency or some “fairness” issue. Your task here is to explain the motivation for government allowing only a single firm in naturally monopolistic industries and yet later regulating the price of this firm. Analyze the situation before and after government intervention, and then conclude by referring to the possible reason for...
8. Natural monopoly analysis The following graph shows the demand (D) for electricity services in the...
8. Natural monopoly analysis The following graph shows the demand (D) for electricity services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local electricity 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. Monopoly Outcome0123456789104036322824201612840PRICE (Cents per Kilowatt-hour)QUANTITY (Thousands of kilowatt-hours)DMRMCATC Which of...
Natural Monopoly A. Draw a natural monopoly in an equilibrium with a profit. Clearly label the...
Natural Monopoly A. Draw a natural monopoly in an equilibrium with a profit. Clearly label the relevant areas. B. Show how this monopoly could be regulated to produce (and price) at MC, or at AC. A part of this answer should explain/show how regulation effects the demand and MR curves. C. Briefly mention the advantages/disadvantages of each (P=MC, P=AC).
What is a natural monopoly? Why is government justified in regulating a natural monopoly?
What is a natural monopoly? Why is government justified in regulating a natural monopoly?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT