Answer to Question #242024 in Macroeconomics for Mnb

Question #242024
Eskom, as a natural monopolist state-owned enterprise (SOE0, produces too little output at too high a price. Using a figure, illustrate and explain the social costs of a natural monopoly (e.g. electricity generation
1
Expert's answer
2021-09-26T20:18:00-0400


EXPLANATION

Region PKBL is the inefficient region. In this region the profits are high. Prices are also hyped up. But the output would be lower. 

In the region of CXAPof losses. Output are higher and prices are low. 

We won't see a supply curve for a monopoly because we know that monopoly is the price maker. 

A dead weight loss is created because some of the consumers are not served who are ready to pay amount equal to marginal cost.


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