A localtelephone company is a natural monopoly because it enjoys economies of scale inproduction.
You can assume that themarginal cost of providing additional telephone services is constant.
The telephone company currently charges onlyone price for telephone calls to all its customers


Part A
use a diagram to illustrate the situation described above.
Your diagram should show the quantitysupplied, price charged and the profit made by the monopolist.

PAPart B
How is the output of the monopoly different from what it would be if thetelephone industry was perfectly competitive?
What is the deadweight loss?
Illustrateyour answer with a diagram