Sketch Graph a Natural Monopoly with the Typical ATC, MC

question 27

Essay

Sketch graph a natural monopoly with the typical ATC, MC, and demand and MR functions
a.Label the profit maximizing monopoly price with a P1.b.Label the typical public utility commission regulated price which requires no subsidy as P2 c.Label the socially efficient price as P3 d.Shade in the area of the subsidy required in one of the cases above e.Explain why a subsidy is often used for public transportation but not for municipal water supply

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Definitions:

Autonomy versus Shame and Doubt

A stage in Erik Erikson’s theory of psychosocial development where toddlers learn to exercise will and do things for themselves or they doubt their abilities.

Animism

The conviction that every object, location, and being holds a unique spiritual presence.

Postconventional Moral Reasoning

A stage of moral development where individuals make decisions based on internal principles and the consideration of universal ethical rules.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed.