The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist.
Figure 11-15

Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing?

Question

The figure below depicts the demand, marginal revenue and marginal cost curves of a profit-maximizing monopolist.
Figure 11-15

Refer to Figure 11-15. Which of the following areas represents the deadweight loss due to monopoly pricing?

Quizplus · Accepted Answer

The deadweight loss due to monopoly pricing is represented by the area of the triangle bge, which is the difference between the consumer surplus in a perfectly competitive market (represented by the triangle afg) and the consumer surplus under monopoly pricing (represented by the triangle bde). Rectangles acdb and cfgd represent the profits earned by the monopoly.

The Figure Below Depicts the Demand, Marginal Revenue and Marginal