What price-output combination would exist with efficient

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Reference no: EM13151666

1. Suppose a natural monopolist has fixed costs of $50 and a constant marginal cost of $10. The demand for the product is as follows:

Price ($) $100 90 80 70 60 50 40 30 20 10

Quantity demanded per day 0 5 10 15 20 25 30 35 40 45

a) What price and quantity will prevail if the monopolist isn’t regulated?

b) What price-output combination would exist with efficient pricing (MC = P)?

2. Draw a graph with MC, Demand curve and MR curves for the problem above. Show the price-output combination for each of the questions (a) and (b) above.

Reference no: EM13151666

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