Figure 14-8
-Refer to Figure 14-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Question

Figure 14-8 
-Refer to Figure 14-8.The deadweight loss caused by a profit-maximizing monopoly amounts to

Quizplus · Accepted Answer

The deadweight loss caused by a monopoly equals the area of the triangle formed by the monopoly price, the competitive price, and the quantity traded. In this case, the competitive price would be $50 (where the demand curve intersects the marginal cost curve) and the quantity traded would be 8 units. The monopoly price is $80 (where the marginal revenue curve intersects the monopolist's marginal cost curve). Therefore, the deadweight loss is: 
(1/2) x (80-50) x (12-8) = $250.

Figure 14-8 -Refer to Figure 14-8.The Deadweight Loss Caused by a Profit-Maximizing