loss in the diagram.
13. The distribution of natural gas for residential use is often a
natural monopoly. The diagram below shows the cost and
revenue curves for a profit-maximizing gas distribution firm. Price
is given in dollars per cubic metre and quantity is the
number of cubic metres per month.
a. Explain how you know that this firm is a natural
monopoly.
b. If the firm is unregulated, what do you predict its price,
output, and profits to be?(m^3 )