Homewor Back to Assignment Attempts 2 2 Keep the Highest 2 / 3 8. Natural monopoly analysis The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. (?) Monopoly Outcome PRICE (Dollars per hundred cubic feet) ATC MR 10 QUANTITY (Hundreds of cubic feet) Which of the following statements are true about this natural monopoly? Check all that apply. The water company is experiencing diseconomies of scale. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. The water company must own a scarce resource. In order for a monopoly to exist in this case, the government must have intervened and created it. True or False: Without government regulation, natural monopolies can earn positive profit in the long run. True O False