MR Demand 10 20 30 40 50 60 70 80 Duantity Refer to Figure 15-20. The...

Question

Question

Answer 1

Answer #1

1. The deadweight loss caused by a profit maximising monopoly amounts to

Answer-b)$225

For the calculation of deadweight loss we have to use the formula of area of triangle.

Area of triangle = 1/2(base*height)

Deadweight loss is the efficiency loss. It is the triangle between the socially efficient price and monopolist price.

Deadweight loss = 1/2(15*30)=225

15=45-30

30=60-30

Answer - $225

2. Which area represents the deadweight loss for a monopoly?

Answer - c) J+H

The triangle J+H represents the area of deadweight loss.

3. The monopolist will produce at what quantity?

Answer - The monopolist will produce at output 30. The profit maximising condition is MR=MC. In the given diagram the MR=MC at output level 30.

Answer 2

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