Question 1 (20 marks). The Metro Electric Company produces and distributes electricity to residential customers in the metropolitan area. This company is a monopoly and faces the following (inverse) demand: P = 0.04 - 0.01Q, where Q is the quantity and P is the price per unit. Its cost function is: C(Q) = 0.005Q + 0.0037502. (a) What is the firm's marginal cost function? What is the firm's marginal revenue function? Find the equilibrium price and quantity. (5 marks) (b) Illustrate graphically the equilibrium price, quantity, consumer surplus, and producer surplus. (5 marks) (c) Compute the equilibrium consumer surplus and producer surplus. Compute the deadweight loss of this monopoly. (5 marks) (d) Now a new competitor, Western Light, with constant marginal costs MC. = 0.025 can potentially enter the market. What can Metro Electric Company do to retain the market? What price would it charge? What quantity would it produce? How do the deadweight loss in this scenario compares to that in part (c)? How would your answers (here in part (d)) would differ if instead MC. = 0.037