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Figure 15-16 shows the market demand and cost curves facing a natural monopoly.

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Figure 15-16 shows the market demand and cost curves facing a natural monopoly.

Figure 15-16

Figure 15-16 shows the market demand and cost curves facing a natural monopoly.

Refer to Figure 15-16. Suppose the government regulates this industry in order to remove the inefficiency implied by the behavior of the profit-maximizing owners. If regulators require that the firm produces the economically efficient output level, what is this level and what price will be charged?

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Q1 units; P1

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Q3 units; P3

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Q1 units; P4

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Q4 units; P6

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InMicro

Edition: 1^st

Authors: Hubbard, O'Brien

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