As the question says there were
constant average costs, AC will increase at a constant rate, or by the same amount as the earlier output. So AC will be horizontal. If AC is horizontal, MC will be horizontal as well and therefore AC and MC overlap.
As this is a monopolist and the sole supplier, it will be supplying to the whole industry. Therefore, average revenue will be downward sloping and MR twice as steeply.
When the industry was perfectly competitive, all the small firms had to be
price takers, and so nobody could earn profits because consumers could easily shift to another supplier. Therefore, all small firms produced where, AC=AR ie output Q1 and price P1. But now that, it is a monopoly, there is no such fear that customers will shift to another supplier, because the monopolist is the sole supplier. So it can profit maximise, and there will produce where MC=MR ie output Q2 and Price P2.
So this will increase price(from P1 to P2) and reduce output(from Q1 to Q2). Option E.