Question 16 of 25 Question Market Power and Monopoly - End of Chapter Problem Consider the firm depicted in the accompanying diagram. DWL: Monopoly DWL: P = LATC - -NNNNNNNNNNWWWWWWW LMC Price ($/unit) LATC MR 0 1 2 3 4 5 5 6 7 8 9 10 11 12 13 14 15 Quantity 55 OF ENG 04:40 IN 17/11/2021a. This firm a natural monopoly, because b. This firm earn a profit if it is not subject to regulation, because c. If the government requires the firm to charge no more than its marginal cost of production, units will be sold at a price of The problem with capping prices at marginal cost is that d. If the government allows firms to charge no more than their average total costs of production, units will be sold at a price of The problem with capping prices at average total cost is that ENG 04:40 W 55 OF IN 17/11/2021 PrtSen Home End PgUp PgDn F11 F12 F3' F4 F7 F8 F9 F10 F5 F6Question b. This firm earn a profit if it is not subject to regulation, because c. If the government requires the firm to charge no more than its marginal cost of production, units will be sold at a price of The problem with capping prices at marginal cost is that d. If the government allows firms to charge no more than their average total costs of production, units will be sold at a price of The problem with capping prices at average total cost is that Graphically, deadweight loss is the area between the demand and LMC (supply) curves over the units of output not produced, but that is under competitive conditions. There is no deadweight loss in this case because output is at the competitive level under the pricing rule, P = LMC. e. In the graph, shade the areas representing deadweight loss under the other two pricing regimes. W M BP 90 04:40 L ENG 55OF IN 17/11/2021