Susan runs a natural monopoly by supplyingwater for a remote village.The diagram below shows her output and pricingdecision. Use the graph to answer the follwoingquestions-Price, marginalrevenue, marginalcost, averagetotal cost$35ATCMR160 220 250 300Quantity of output (per week)Q.1 In order to maximize profit, how many unitsof water will Susan produce? [Answer inNumerics only]Q.2 What is Susan's per unit cost at profitmaximizing unit? [Answer in Numerics only] Q.3 The price at which the monopolist sells thewater for is- [Answer in Numerics only]Q.4 Total profit earned by the sell of water is-[Answer in Numerics only]

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Q.1 In order to maximize profit, how many units of water will Susan produce? [Answer in Numerics only]

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 7SCQ: From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural...

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Question

Susan runs a natural monopoly by supplying
water for a remote village.
The diagram below shows her output and pricing
decision. Use the graph to answer the follwoing
questions-
Price, marginal
revenue, marginal
cost, average
total cost
$35
ATC
MR
160 220 250 300
Quantity of output (per week)
Q.1 In order to maximize profit, how many units
of water will Susan produce? [Answer in
Numerics only]
Q.2 What is Susan's per unit cost at profit
maximizing unit? [Answer in Numerics only]

Q.3 The price at which the monopolist sells the
water for is- [Answer in Numerics only]
Q.4 Total profit earned by the sell of water is-
[Answer in Numerics only]

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