9. Regulating a natural monopoly Consider the only internet service provider in a small town, which you can assume operates as a natural monopoly. The following graph shows the demand curve for internet services per month, as well as the provider's marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. A graph plots price in dollars per subscription on the y-axis ranging from 0 to 100 in increments of 10 and quantity in thousands of subscriptions on the x-axis ranging from 0 to 20 in increments of 2. A downward sloping straight line blue demand curve labeled D is defined by (0,90) and (18, 0). A downward sloping straight line black marginal revenue curve labeled M R is defined by (0,90) and (9, 0). A horizontal orange line labeled M C occurs at price level higher. A green curve convex with respect to the origin decreases at a decreasing rate, and is labeled A T C. Four grey stars are plotted, each with grey dashed lines extending to both axes. One is plotted along the demand curve at the quantity at which M C equals M R with coordinates (6, 60). One is plotted along the A T C curve at this same quantity with coordinates (6, 40). One is plotted at the intersection of A T C and demand at (11, 35) One is plotted at the intersection of M C and D at (12, 30). 0 2 4 6 8 10 12 14 16 18 20 100 90 80 70 60 50 40 30 20 10 0 PRICE (Dollars per subscription) QUANTITY (Thousands of subscriptions) D MR MC ATC 6, 40