5) Urban transit systems, especially those with rail systems, typically experience significant economies of scale in operation. Consider the transit system data in the table below.

Urban Transit
D E M A N D	Quantity	1	2	3	4	5	6	7	8	9	10
Price	$10	9	8	7	6	5	4	3	2	1
Marginal Revenue	$10	8	6	4	2	0	-2	-4	-6	-8
C O S T S	Marginal Cost	$9	6	5	3	2	3	4	5	7	10
Average Cost	$9	7.5	6.7	5.8	5	4.7	4.6	4.6	4.9	5.4

1. If the transit system were allowed to operate as an unregulated monopoly, what quantity would it supply and what price would it charge?
2. If the transit system were regulated to operate at zero economic profit, what approximate quantity would it supply and what approximate price would it charge?
3. If the transit system were regulated to provide the quantity with the lowest average cost, what output would it supply and what price would it charge? What subsidy would be necessary to ensure this efficient provision of transit services?

6) For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. firms compete with firms from other countries, would this policy make the same sense as it might in a purely domestic context?Explain.