Why is this firm a natural monopolist

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Reference no: EM13153180

Suppose that a monopoly has fixed costs of $1000 and marginal cost of $100. They face a straight market demand curve that runs from $500 on the price axis to 1000 on the quantity axis.

a. Plot their demand, marginal revenue, marginal cost and average total cost on graph paper.

b. Indicate their profit-maximizing quantity.

c. How much profit will they make at that quantity?

d. Why is this firm a natural monopolist?

Reference no: EM13153180

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