Figure 15-6

-Refer to Figure 15-6.The deadweight loss caused by a profit-maximizing monopoly amounts to

Question

Figure 15-6
 
-Refer to Figure 15-6.The deadweight loss caused by a profit-maximizing monopoly amounts to

Quizplus · Accepted Answer

The deadweight loss caused by a profit-maximizing monopoly is equal to the triangle formed by the following points: the intersection of the demand and marginal cost curves (point A), the intersection of the demand and monopoly price curves (point B), and the intersection of the monopoly price and marginal cost curves (point C). In the graph, the distance AB represents the consumer surplus loss, while the distance AC represents the producer surplus gain. Therefore, the deadweight loss is equal to the area of the triangle ABC, which is (1/2)x(10)x(25-5) = $250.

Figure 15-6 -Refer to Figure 15-6.The Deadweight Loss Caused by a Profit-Maximizing