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misserz0210 misserz0210
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The diagram below shows cost and revenue curves for a natural monopoly producing electricity. Price is dollars per kilowatt hour and quantity is kilowatt hours per day.

Short description: A graph plots quantity against price in dollars per kilowatts hour. Long description: The horizontal axis representing quantity ranges from 1.0 to 1.5 in millions. The vertical axis representing price in dollars per kilowatts hour ranges from 0.06 to 0.12. The graph plots two lines and two curves. The curve, LRAC passes through the following points: (1.0, 0.11), (1.4, 0.09), and (1.5, 0.08). The curve, MC passes through the following points: (1.0, 0.06) and (1.5, 0.07). The line, D passes through the following points: (1.0, 0.12), (1.4, 0.09), and (1.5, 0.08). The line, MR passes through the following points: (1.0, 0.06), and (1.2, 0). The curve, MC intersects the line, MR and line, D at points (1.0, 0.06) and (1.5, 0.07). The curve, LRAC intersects the line, D at the point at (1.4, 0.09). Note: all values are approximate.

FIGURE 12-8

Refer to Figure 12-8. Suppose this firm is being regulated using a policy of marginal-cost pricing. In this case, economic profits are equal to



▸ -$50 000.

▸ -$28 000.

▸ $90 000.

▸ $0.

▸ -$15 000.
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Microeconomics

Microeconomics


Edition: 17th
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