The market for electricity is a naturally monopolistic market. The graph below depicts the monthly demand...

 

Transcribed Image Text:

The market for electricity is a naturally monopolistic market. The graph below depicts the monthly demand and marginal revenue curves for this market and the marginal cost and average total cost curves of the monopolist supplier. The quantity of electricity is measured in kilowatt-hours (kWh) per month, and the price is measured as the price per kilowatt-hour of electricity. $0.70 50.60 50.50 50.40 50.30 50.10 40 ATC MC MR Demand 80 120 160 200 220 240 Quantity millions of kWh) a) 10 Pts. Identify the profit-maximizing quantity of electricity that the monopolist should produce, and the monopoly price per kilowatt-hour. (Explain your calculation) b) 10 Pts. Suppose that the monopolist produces the profit-maximizing quantity of electricity and charges the monopoly price that you identified in a part of the question. What is the amount of profit that the monopolist earns? (Explain your calculation) The market for electricity is a naturally monopolistic market. The graph below depicts the monthly demand and marginal revenue curves for this market and the marginal cost and average total cost curves of the monopolist supplier. The quantity of electricity is measured in kilowatt-hours (kWh) per month, and the price is measured as the price per kilowatt-hour of electricity. $0.70 50.60 50.50 50.40 50.30 50.10 40 ATC MC MR Demand 80 120 160 200 220 240 Quantity millions of kWh) a) 10 Pts. Identify the profit-maximizing quantity of electricity that the monopolist should produce, and the monopoly price per kilowatt-hour. (Explain your calculation) b) 10 Pts. Suppose that the monopolist produces the profit-maximizing quantity of electricity and charges the monopoly price that you identified in a part of the question. What is the amount of profit that the monopolist earns? (Explain your calculation)