PRICE 1 2 10. Study Questions and Problems #10 The following graph represents a natural monopolist. Suppose that regulators have set the fair-return price at $3. Use the black point (cross symbol) to indicate the equilibrium under unregulated monopoly. Then use the grey point (star symbol) to indicate the equilibrium for the monopoly regulated by marginal cost pricing. Finally, use the purple point (diamond symbol) to indicate the equilibrium for the monopoly regulated by fair-return pricing. 5 • + MC Pricing Monopoly Pricing LRAC Fair-Return Pricing LRMC MR D 0 0 1 2 3 4 5 6 7 8 QUANTITY Use the graph to complete the following table. Pricing Price (Dollars) Quantity (Units) Stays in Business? Unregulated monopoly $ Marginal cost pricing $ Under which of the following pricing regulations will the monopolist stay in business? Check all that apply. Fair-return pricing Marginal cost pricing Monopoly pricing
PRICE 1 2 10. Study Questions and Problems #10 The following graph represents a natural monopolist. Suppose that regulators have set the fair-return price at $3. Use the black point (cross symbol) to indicate the equilibrium under unregulated monopoly. Then use the grey point (star symbol) to indicate the equilibrium for the monopoly regulated by marginal cost pricing. Finally, use the purple point (diamond symbol) to indicate the equilibrium for the monopoly regulated by fair-return pricing. 5 • + MC Pricing Monopoly Pricing LRAC Fair-Return Pricing LRMC MR D 0 0 1 2 3 4 5 6 7 8 QUANTITY Use the graph to complete the following table. Pricing Price (Dollars) Quantity (Units) Stays in Business? Unregulated monopoly $ Marginal cost pricing $ Under which of the following pricing regulations will the monopolist stay in business? Check all that apply. Fair-return pricing Marginal cost pricing Monopoly pricing
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter15: Economic Regulation And Antitrust Policy
Section: Chapter Questions
Problem 10PAE
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Question
Transcribed Image Text:PRICE
1
2
10. Study Questions and Problems #10
The following graph represents a natural monopolist. Suppose that regulators have set the fair-return price at $3.
Use the black point (cross symbol) to indicate the equilibrium under unregulated monopoly. Then use the grey point (star symbol) to indicate the
equilibrium for the monopoly regulated by marginal cost pricing. Finally, use the purple point (diamond symbol) to indicate the equilibrium for the
monopoly regulated by fair-return pricing.
5
• +
MC Pricing
Monopoly Pricing
LRAC
Fair-Return Pricing
LRMC
MR
D
0
0
1
2
3
4
5
6
7
8
QUANTITY
Use the graph to complete the following table.
Pricing
Price
(Dollars)
Quantity
(Units)
Stays in Business?
Unregulated monopoly $
Marginal cost pricing
$
Under which of the following pricing regulations will the monopolist stay in business? Check all that apply.
Fair-return pricing
Marginal cost pricing
Monopoly pricing
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