Question: 2. Consider a natural monopoly with the total cost function AC(Q) = F + cQ, where F > 0, c > 0. Suppose that the

2. Consider a natural monopoly with the total cost function AC(Q) = F + cQ, where F > 0, c > 0. Suppose

Explain how this change affects (increase/decreaseo change) the optimal monopoly price p

2. Consider a natural monopoly with the total cost function AC(Q) = F + cQ, where F > 0, c > 0. Suppose that the value of fixed cost F increases to F, > F. Explain how this change affects (increase/decreaseo change) the optimal monopoly price p and quantity Q if: a) the monopoly is regulated to achieve the maximum social welfare with subsidies.b} the monopoly is regulated to achieve the maximum social welfare without subsidies

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2. Find out if there are other reference points that can be used as reasonable alternatives.

1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.