Rex Pharma produces anti-acid medication that is sold in a monopoly market. ' Rex Pharma sells 10,000,000 pills for $12.50 per pill. If the pills were sold for the marginal cost of production of $0.50, Rex Pharma would be able to sell 25,000,000 pills. What is the deadweight loss of this monopoly market?

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The deadweight loss in a monopoly is calculated as the area of the triangle formed between the monopoly price, the marginal cost, and the quantity sold at the marginal cost. The base of the triangle is the difference in quantity (25,000,000 - 10,000,000 = 15,000,000), and the height is the difference in price ($12.50 - $0.50 = $12.00). The deadweight loss is (1/2) * base * height = (1/2) * 15,000,000 * $12.00 = $90,000,000.

Rex Pharma Produces Anti-Acid Medication That Is Sold in a Monopoly