Natural gas is a natural monopoly. The figure above shows the ...

[tuffie]

Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When an average cost price rule regulation is imposed, the price per household per month is ________.
 
  A) 20 and 30,000 households are served
  B) 40 and 40,000 households are served
  C) 40 and 30,000 households are served
  D) 60 and 20,000 households are served

Question 2

Why is the budget line negatively sloped?
 
  What will be an ideal response?

[cupcake16]

Answer to Question 1

C

Answer to Question 2

Given the consumer's budget and the prices for two goods, if a consumer buys more of one good, he or she must buy less of the other. The budget line shows the trade-off between the two goods, that is, as more of one is purchased, less of the other can be purchased.