Please find the attached graph (jpeg).

A. Regulation restored the efficient level of price and quantity by simulating a perfectly competitive free market; specifically by enforcing the equilibrium of supply = demand. Otherwise, the monopolist would have had incentive to set quantity at MR = MC and price at the corresponding level of demand (higher price and lower quantity).

B. It is certainly an inefficient rationale for regulation in many real world situations, such as "contestable markets" (the term coined by Panzer and Willig). By definitions these markets have small barriers to entry (natural or state imposed; like licensing). It is generally agreed that even with these limitations to the full spectrum of competition, the efficient market assumption usually holds (for all practical purposes). There are some exceptions, such as "hit-and-run" competitors in contestable markets. These could be most efficiently dealt with by existing FTC business practice regulations; rather than treating the firms as monopolies or oligopolies.

C. I believe that the cartel view is fundamentally flawed and as such is not well described by this text-book idea of monopolies. Cartels are unstable arraignments, which usually crumble to competitive forces directly or indirectly. The primary reason is that individual agents have incentive to "cheat", but responding to the free market (offering lower prices - often through proxies such as better service or more favorable contractual terms). Two major examples of cartels exhibiting this "problem" are Germany's bar association (which tries to enforce flat fees, to young lawyers' resentment) and OPEC.