Is a monopoly with the following cost curve facing the following demand curve a natural monopoly?...

Is a monopoly with the following cost curve facing the following demand curve a natural monopoly?

P(Q)=100-5Q
C(Q) = 8,000 + 10 Q²

A.Yes

B. No

C. Cannot be determined from the information provided

Expert Solution

Option B

No

A natural monopoly has a downward-sloping average total cost curve and the marginal cost curve is below it and also sloping downward.

Marginal cost is a change in the total cost and found by differentiation

The MC curve is upward sloping it means that the ATC curve is also upward sloping so the firm is not a natural monopoly.

Rahul Sunny answered 2 years ago

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