Problem 3: Natural Monopoly The company Pacific Gas and Electric has a total cost curve given by: TC = 200,000 + 2Q + Q Where () is quantity of electricity generated in million kilowatt hours (kWh). PG&E is a natural monopoly. The demand for electricity (million kWH) is given by: = 2=400- 0.1P What is the equilibrium price and quantity of electricity generated by PG&E in an unregulated market? What is the average total cost of PG&E producing electricity at the amount from part a? What are PG&E's total profits (part a)? Draw PG&E's ATC curve, MC curve, and MR curve. Also draw the demand curve. The government is concerned that customers are being charged an unreasonably high rate for electricity and mandates PG&E charge the marginal cost of producing electricity (resulting in the Q from a perfectly competitive market). What is the quantity that would be produced? What is PG&E's total profit when charging p=MC (from part e)? What would happen in the long run under the government policy from part e? Explain