Use the following table to answer the question : Table 15-3: shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price.
-Refer to Figure 15-3.If the firm practices marginal-cost pricing,the equilibrium price would be _____.

Question

Use the following table to answer the question : Table 15-3: shows the average cost [AC],marginal cost [MC],and demand [D] curves for a natural monopoly;Qi denotes quantity and Pi denotes price.

-Refer to Figure 15-3.If the firm practices marginal-cost pricing,the equilibrium price would be _____.

Quizplus · Accepted Answer

Marginal-cost pricing occurs when the firm sets the price equal to the marginal cost. From the table, at a quantity of 4, the marginal cost is equal to $2. At a quantity of 4, the demand curve intersects with the marginal cost curve, giving a price of $2, which is the equilibrium price. Therefore, the answer is B.

Use the Following Table to Answer the Question : Table