Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist. At the monopolist's profit-maximizing level of output, deadweight loss equals the area:
A)C0N
B)ALN
C)JLN
D)JKN

Question

Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist.  At the monopolist's profit-maximizing level of output, deadweight loss equals the area:
A)C0N 
B)ALN 
C)JLN 
D)JKN

Quizplus · Accepted Answer

The monopolist's profit-maximizing level of output is F and the socially optimal level of output is H. Deadweight loss is the area to the right of F below the demand curve and above the marginal cost curve.

Suppose the Accompanying Figure Shows the Demand Curve, Marginal Revenue