9. Regulating a natural monopoly Consider the only electric company in a small town, which you can assume operates as a natural monopoly. The following graph shows the demand carve for electncity services per month, as well as the provider's marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Suppose the governiment has elected not to impose regulatons on the industry, and so the firm faces no regulatory constraints in maximizing profits. Complete the first row of the followng table. Suppose now that the government decides to requare the monopolst to set its price equal to marginal cost. Complete the second row of the previous table. Suppose how that the government decides to require the monopolist to set its price equal to average total cost. Complete the third row of the previous tabie Under average-cost pricing, the government will rase the price of output whenever a firm's costs increase, and lower the price whenever a firm's costs decrease, Over time, under the average-cost pricing policy, what will the local electric company most likely do? Alow its costs to increase Work to decrease its costs