Natural monopoly and Regulation.The demand curve for the product of a monopoly firm is given by P = 120-2Q, and the firm's short-run total cost is given by TC(Q) = F + 20Q, where F is a positive constant.

1. Find the monopolist's price and quantity.
2. Find the monopolist's economic profit. For what values of F is the monopolist willing to serve the market?
3. Provide a graphical representation of the monopolistic equilibrium, illustrating MC, AC and MR (hint: you can plot the AC function by choosing some points and connecting them keeping in mind that it is not a linear function). What can you conclude observing the monopolist's AC?
4. Calculate the deadweight loss from the firm's exercise of monopoly power. Can the regulator implement the marginal cost pricing? Would the average cost pricing reduce the deadweight loss?