Ampstand is a natural monopolist earning economic profits

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Ampstand is a natural monopolist earning economic profits.

(a) Draw a graph of Ampstand, labeling the profit-maximizing price Pm,  the profit-maximizing quantity Qm, and the allocatively efficient quantity QSO. Shade the area of deadweight loss.

(b) If Ampstand is earning economic profits, why would other firms not enter the market? Explain.

(c) The government decides to regulate Ampstand's price and follows a fair-return policy. On your graph from part (a), label this price PFR and the new output quantity QFR. 

(d) If Ampstand's total revenue at PFR changes to $100 million, what must its total cost be at this productive quantity? 

(e) Determine the output quantity from part (d) if PFR is $10. The demand curve intersects the y-axis at $15. What is the consumer surplus with the government intervention?

(f) How would the government action in part (c) affect the deadweight loss in Ampstand's market?

(g) What would the government have to do to get Ampstand to produce at the socially optimal quantity and stay in the market in the long run? Explain.

(h) Wattsit is a small firm that sells a complementary good to Ampstand's product in a perfectly competitive market. Assuming Wattsit was in long-run equilibrium, illustrate the short-run effect of the government intervention from part (e) on Wattsit's supply and demand in a separate graph. If Wattsit earns any economic profit or loss, shade it. 

(i) What happens to the demand for the inputs in the factor market required to produce Wattsit's good as a result of the changes in part (h)?