(Solved): 7. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The ...

7. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph shows the monthly demarid curve for cable services, the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. (?) Suppose that the government has decided not to regulate this industry. and the firm is free to maximnize profits. Without constraints. Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table. Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost: Complete the third row of the previous table. True or False: Under the average-cost pricing policy, the cable company has no incentive to cut costs. True False