Economic 2. Consider a local utility company (Xcel Energy).In what ways is this company a natural monopoly?a.MR=MCb. Consider the cost structure and market demand for the Xcel Energy. Assume:1. there are high fixed costs of starting an energy company2. the marginal cost per service sold is constant and fairly low3. each consumer pays the same price for service - there are no differentiating package deals.Given the assumptions above, draw the cost structure (MC and ATC), demand and marginal revenue.Vc. State the profit maximization rule to determine the optimal quantity of output (electricity service) amonopolist will choose.d. Use the rule in part (c) to find and label the1. profit maximizing quantity:2. price the firm will set:3. the average total cost:c. Use the graph to show the welfare effects of this behavior. That is, what is1. CS:2. Economic profit (equation):3. DWL:f. Think about being a changemaker for the common good. What might public policy be towards XcelEnergy?

A monopoly is a market structure in which a single firm is the sole seller of a product or service…

2. Consider a local utility company (Xcel Energy). a. In what ways is this company a natural monopoly? MR=MC b. Consider the cost structure and market demand for the Xcel Energy. Assume: I, there are high fixed costs of starting an energy company 2. the marginal cost per service sold is constant and fairly low 3. each consumer pays the same price for service-there are no differentiating package deals. Given the assumptions above, draw the cost structure (MC and ATC), demand and marginal revenue. c. State the profit maximization rule to determine the optimal quantity of output (electricity service) a monopolist will choose.