00:01
Okay, so with this question, we have a natural monopoly, and its average cost curve is downward sloping, and it can perfectly price discriminate.
00:09
So we're going to kind of graph this.
00:12
Got price here, quantity here, and what usually happens is there's a marginal cost curve that goes something like that.
00:27
And then there's a marginal revenue curve.
00:32
That's like that.
00:37
And then there's a demand curve, which might go like that, demand.
00:47
And then average total cost is going to be somewhere in there.
00:56
Let's think about this.
00:57
Average total cost is going to be like that kind of thing.
01:01
Okay, so now if we say it produces at q quantity asterisk, what we know is that monopolies can price discriminate.
01:16
They have no competition.
01:18
And so it will not produce where marginal revenue meets marginal cost.
01:25
It will not...