1. Please describe a natural monopoly in detail. Explain what you would do if you were a politician who has the absolute power to deal with this monopoly and were exclusively interested in maximizing utility within society

2. Monopolies are always bad that should be avoided at all costs.

a) True

b) False

3. Assume that a company sells game cartridges that can be used in a popular video game system. The company currently sells 300 cartridges per week and earns $500 in profit. The production manager calculates that the marginal cost of producing the next unit is $5, while marginal revenue from one additional unit is $10. What should we conclude based on this information?

a) The company should reduce their its to 295 cartridges to increase profit.

b) Profit would fall to $495 by increasing output by 1 unit.

c) The profit-maximizing output is 300 cartridges.

d) Profit would rise to $505 by increasing output by 1 unit.

3. The following table shows the quantity demanded of a good at various prices for a monopoly firm. Which production maximizes its profit? What is the profit at this point and what is the marginal revenue?

\fPrices MC AC $16 $15 $12 Demand MR O 90 130 Quantity