Answer Happy

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
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
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