Consider the local electricity company, a natural monopoly. The graph shows the demand curve for kilowatt-hours (kWh) of electricity, the company's marginal revenue curve (labelled MR), the marginal cost curve (labelled MC), and the average total cost curve (labelled AC). The three gray stars mark the coordinates (20, 33), (20, 18), and (38, 10).
The graph is provided in the link...thanks
http://farm3.static.flickr.com/2705/4145138755_962da016ea_o.png
What is consumer surplus in the market for electricity at the monopolist's profit-maximizing output?
A. $330,000
B. $800,000
C. $270,000
D. $150,000
E. $450,000
Price regulators must permit a price at which the monopolist is just willing to operate, that is, a price at which the monopolist makes a profit of zero.
Graphically, where is this price?
A. The price on the demand curve that corresponds to marginal revenue equalling marginal cost
B. The price that corresponds to the point at which marginal cost equals marginal revenue
C. The price that corresponds to the point at which the demand curve intersects the average cost curve
D. The price that corresponds to the point at which the demand curve intersects the marginal cost curve|||What is consumer surplus in the market for electricity at the monopolist's profit-maximizing output?
Answer is: B
Graphically, where is this price?
Answer is: C
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