Use the following to answer questions:
Figure: Paint Market 2
-(Figure: Paint Market 2) What is the deadweight loss (if any) from the monopoly in this diagram relative to its optimum quantity?
A) $125,000
B) $250,000
C) $300,000
D) No deadweight loss

Question

Use the following to answer questions:
Figure: Paint Market 2 
-(Figure: Paint Market 2) What is the deadweight loss (if any) from the monopoly in this diagram relative to its optimum quantity?
A) $125,000 
B) $250,000 
C) $300,000 
D) No deadweight loss

Quizplus · Accepted Answer

The deadweight loss from a monopoly is the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. In this case, the deadweight loss is represented by the area of the triangle between the demand curve and the marginal cost curve from the monopoly quantity to the socially optimal quantity. The correct calculation of this area results in $125,000.

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