A store provides entertainment to a community. The demand for the item is p(q)=10-(q/10), the costs are C(q)=1+(q/2)

a) Does the store have the properties to be a natural monopoly

b) Find the unregulated monopolists profit maximizing price, output, and profit

c) The government passes a law that requires utility providers to practice MC pricing ( p(q^R)= MC(q^R) ) , what is the regulated monopolist output, price, and profit

d) What is the lump sum subsidy that the regulator must provide the utility company to practice MC pricing with no operating loss

e) compute consumer surplus from parts a and b.

f) What are the pros and cons on MC pricing in natural monopolies