Figure: The Monopolist II
(Figure: The Monopolist II) Look at the figure The Monopolist II.The deadweight loss associated with this monopoly can be measured as the area:
A)0.5(P₁ - P₂)(Q₂ - Q₁).
B)0.5 (P₂ - P₄)(Q4 - Q₂).
C)0.5 (P₁ - P₃)Q₃.
D)0.5 (P₁ - P₃)Q₂.

Question

Quizplus · Accepted Answer

The deadweight loss associated with this monopoly equals the triangle between the demand curve and the marginal cost curve from the monopolist's quantity level to the competitive quantity level. This is represented by the area 0.5 (P₂ - P₄)(Q4 - Q₂).

Figure: the Monopolist II