A monopolist ________ when its marginal revenue is zero.

Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?

A) at a price of $8 B) at a price of $6 C) at a price of $4 D) More information is needed to determine the price at which total revenue is maximized.

A natural monopoly

a. typically arises because of a patent or copyright b. is a firm that, due to economies of scale, can serve a market at lower average cost than two or more firm could c. is a Pareto improvement as compared to a perfectly competitive market d. enjoys diseconomies of scale, so average total cost falls as more output is produced e. enjoys economies of scale, so average total cost rises as more output is produced