Will it produce to where price equals its marginal cost

Reference no: EM131345351

A firm is a natural monopoly (Chapter 11). Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). The firm can perfectly price discriminate.

a. In a graph, show how much the monopoly produces, Will it produce to where price equals its marginal cost?

b. Show graphically (and explain) what its profit is.

Reference no: EM131345351

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