Natural Monopolies Flashcards
1
Q
Natural monopolies
A
Large distrubution network that have very high fixed costs and it is better for the customers to have one supplier.
2
Q
Minimum efficient scale of production is not seen on the diagram.
A
MC remain below AC over the whole output range.
3
Q
The firm would profit maximise
A
MR = MC at Q1
Charging price at P1
4
Q
The firm makes economic profit
C1P1AB
A
Total revenue 0P1AQ1 - Total cost 0C1BQ1
