Consider the graph below, which demonstrates a natural monopoly's cost, demand, and marginal revenue curves along with t

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Consider the graph below, which demonstrates a natural monopoly's cost, demand, and marginal revenue curves along with three designated market price/quantity combinations (A, B, C). Price/Cost Natural Monopoly B Demand MR I A ATC MC Quantity
Consider how price regulation may improve the performance of natural monopolies. In your response: • identify the "monopoly" price • identify the "socially optimal" price • describe two options (discussed in 11.3 of the online textbook) that a government has to regulate price and output in this industry • explain how price under regulation compares to the "monopoly" and "socially optimal" prices
Assignment Learning Objectives By completing this assignment, you will be making progress towards the following learning outcomes for this week: • Compare pricing decisions in different industry structures • Determine the appropriate pricing strategy for a natural monopoly • Interpret a graph of regulatory options • Contrast "cost-plus" and "price-cap" regulation