19.9 The demand for telephones in a midsize city is given by Q
1,000 50P, where Q is the number of homes buying service (in thousands) and P is the monthly connect charge (in dollars). Phone system costs are given by TC
500 ln (.1Q 20) for Q  200.

a. Is telephone production a natural monopoly in this city?

b. What output level will an unregulated monopoly produce in this situation? What price will be charged? What will monopoly profits be?

c. If there is active (contestable) competition for the city franchise, what price will prevail?