In the table below are cost and demand data for a pure monopolist.

Quantity demanded Price Marginal revenue Average cost Marginal cost

0 $105.00

1 96.00 $96.00 $144.00 $144.00

2 87.00 78.00 90.00 36.00

3 78.00 60.00 70.00 30.00

4 69.00 42.00 63.00 42.00

5 60.00 24.00 60.00 48.00

a) What are the profit-maximizing level of price and output of the monopolist?

b) Why does the monopolist choose that price and output level in order to obtain maximum profit?

c) Calculate the amount of profit for the monopolist?

d) Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.

(i) What will happen to price and the quantity produced?

(ii) What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?

e) In a diagram, show the Average Total Cost, Marginal Cost, Demand and Marginal Revenue curves of a Natural Monopoly.

f) If a market is contestable, how does the equilibrium differ from that of a monopoly?