ECO 203-Principles of Microeconomics:HW 4 Monopolies due Monday, March 28, XXXXXXXXXXQ1 (p296). What is meant by market power? What are two key types of market power?2. Q2 (p296). Use a graph to...

ECO 203-Principles of Microeconomics:HW 4 Monopolies due Monday, March 28, 2016.1. Q1 (p296). What is meant by market power? What are two key types of market power?2. Q2 (p296). Use a graph to explain the difference between a competitive firm’s average total costcurve and the average cost curve of a natural monopoly.3. Make a normative statement about an industry and a natural monopoly and give an economicexplanation of your answer.4. Describe the shape of a monopolist’s average revenue and marginal revenue curve, and draweach on a graph in correct proportion.5. What are network externalities, and why don’t they give rise to natural monopolies?6. How does the monopolist choose its optimal quantity to produce?7. How does a monopolist set its optimal price?8. What is the shape of the monopolist’s supply curve?9. Define price discrimination and give an example ofa. First-degree or perfect price discriminationb. Second-degree price discriminationc. Third degree price discrimination10. In regulating prices of monopolies, why would it be better for the government to choose a fairreturns price than an efficient, or socially optimal price (p. 293).