How much profit does an unregulated monopolist earn

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Q. (a) How much profit does an unregulated monopolist earn? (b) How much profit would be earned if MC pricing were imposed? 2. Do total profits (A) decrease, (B) increase or (C) stay the same when new technology reduces standard total costs (shifts ATC downward in Figure 26.2 ) in (a) An unregulated natural monopoly? (b) A price-regulated natural monopoly? (c) A profit-regulated natural monopoly? 3. Assume a natural monopolist has fixed costs of $24 also a constant marginal cost of $2. The demand for the product is as follows: Price (per unit) $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 Quantity demanded (units per day) 0 2 4 6 8 10 12 14 16 18 Under these conditions, (a) Illustrate what price also quantity will prevail if the monopolist isn't regulated? (a1) price (a2) quantity (b) Illustrate what price-o/p combination would exist with efficient pricing (MC 5 p )? (b1) price (b2) quantity (c) Illustrate what price-o/p combination would exist with profit regulation (zero economic (c1) price profits)? (c2) quantity Illustrate your answers on the graph below.

Reference no: EM1323055

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