Question

please answer all questions!

Figure 15-6 Price $20+ Marginal Cost 100 150 200 Quantity Marginal Revenue Refer to Figure 15-6. What is the deadweight loss caused by a profit-maximizing monopoly? O O $150 $200 $250 Os300

Answer 1

1. (15-6)

Correct Answer:

C

Working note:

Dead weight loss = .5*(150-100)*(20-15) + .5*(150-100)*(15-10)

Dead weight loss = $250

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2.

Correct Answer:

B

Working note:

For profit maximizing output,

MR = MC

90-2Q = Q

Q = 90/3 = 30

So,

Price = 60-Q = 60-30

Price = $30

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3.

Correct Answer:

B

It is done through the regulatory measures.

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4. (15-5)

Correct Answer:

B

The triangle area BGE is the area that shows total surplus loss in the monopoly as shown in the diagram.

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5. (15-2)

Correct Answer:

C

Total revenue = 500*42 = $21000